Standing Committee E

[Mr. Peter Atkinson in the Chair]

Communications Bill

Clause 257 - Public service remits of licensed providers

Amendment proposed [this day]: No. 303, in 
clause 257, page 225, line 43, leave out subsection (2) and insert— 
 '(2) The public service remit for every Channel 3 service is the provision of a range of high quality and diverse programming which, in particular, makes a significant contribution to meeting the need for the licensed public service channels to reflect the tastes and interests of different communities and cultural traditions within nations and regions of the United Kingdom. 
 (2A) The public service remit for Channel 5 is the provision of a range of high quality and diverse programming.'.—[Mr. Lansley.]
 Question again proposed, That the amendment be made.

Peter Atkinson: I remind the Committee that with this we are discussing the following:
 Amendment No. 467, in 
clause 257, page 225, line 43, leave out subsection (2) and insert— 
 '(2) The public service remit for every Channel 3 service is the provision of a broad range of high quality and diverse programming, including factual and entertainment programmes, in a manner which— 
 (a) satisfies the tastes and interests of the part of the United Kingdom for which that service is licensed, and 
 (b) reflects the regional diversity of the United Kingdom.'.
 Amendment No. 347, in 
clause 257, page 225, line 46, at end insert 
 'including, in respect of Channel 3, a substantial proportion of programmes made in the regions and nations of the United Kingdom outside the M25 area'.
 Amendment No. 393, in 
clause 257, page 225, line 46, at end insert 
 'including, in respect of Channel 3, a substantial proportion of programmes made outside the M25 area'.
 Amendment No. 528, in 
clause 257, page 225, line 46, at end insert— 
 '(2A) In fulfilling the public service remit under subsection (2), every Channel 3 service shall have regard to the need for Channel 3 services (taken together as a network) to provide distinct regional programming, including regional programme production.'.

Nick Harvey: When we broke, we were discussing the remit for Channel 3, which is very limited in scope compared with the Government's aspirations for the channel in their White Paper. What Channel 3 is and what it does is of critical importance to the future of all public service television. The Government and others have observed many times that we have what is fashionably called a broadcasting ecology, in which developments by one broadcaster affect the behaviour of others. For the time being at least, Channel 3 remains the second biggest UK television channel. It is the principal competitor to
 BBC 1, and an advertising competitor to Channels 4 and Five.
 It could be argued that the Broadcasting Act 1990 significantly lightened the regulatory grip on Channel 3, and has resulted in what many of us would see as several adverse developments. There has been a retreat from social action programming, the removal of serious factual programming from the evening schedules and a general reduction in the quality of ITV's news and current affairs programmes. During that period, ITV has moved towards being a predominantly, or solely, commercial centralised channel, rather than a strongly public service oriented network of regional production companies, which had been its tradition and history. 
 The effect of those developments has been felt across the board. As a result of what has happened to ITV, the BBC has retreated from some of the things that it did before that time. Last year, Patricia Hodgson of the Independent Television Commission said: 
''The ITC has just published the conclusions of a four year analysis of peak-time schedules on the main British networks. It shows: diversity across all UK terrestrial channels taken as a whole has narrowed; programmes of minority appeal—notably arts and current affairs—are being pushed out of prime time; whilst the share of peak-time occupied by entertainment programmes has increased.''
 That is damaging to the overall ecology of public service broadcasting. If we look forward to a situation where an American owner might own a single ITV company, it will be important that such an owner understands what is expected of them from the outset. 
 It is odd to me that the clause couches the remits for Channels 3 and Five in exactly the same terms. It is absolutely remarkable that anyone should view those two services as being of like nature, or of equal scale and ambition. If Channel 3 is going to operate in the future on so minimal a remit, the prospects for holding the BBC, or Channel 4 for that matter, to its public service mission would be very much reduced. The Government should be held to their commitment in the White Paper: 
''ITV companies will continue as the main commercial providers of public service broadcasting, before and after digital switchover''.
 That is fundamentally different to the role of Channel Five and it requires a much stronger remit. 
 The Joint Committee, encouraged by the ITC and ITV, recommended a mildly strengthened Channel 3 remit. The amendments are rightly intended to add somewhat to that remit. The requirement to reflect the diversity of the United Kingdom and the programme making that goes on in the regions and nations indicates that a significant part of the regional programming quota should be used to reflect regional diversity. 
 Although we must be wary of being too prescriptive and having a Channel 3 remit that runs to great length, I say again that if a new American owner takes over Channel 3, it should understand what it is taking over from the word go and from the first line of the remit. That should apply not only to individual regional licences, but to the network as a whole. 
 We have continually heard the argument that regional programming does not simply mean programming for the regions, but can, and should, mean programming for the network that is of a regional character. People can point to ''Coronation Street'', or other programmes that are made by regional companies for the network, as being part of ITV's strength. The programmes drawn from regional production bases are valuable to the network as a whole. That is why amendment No. 528 addresses the ITV network and does not simply dwell on the issue of regional licences. I look forward to hearing the Government's stance on the points that my colleagues have made. 
 Clearly, the remit is not the only part of the weaponry with which the regulator will hold ITV and, in particular, any new American owner of ITV, to account. There are other opportunities provided by clauses to which we will come presently. However, the remit is very important. It is the overall mission statement and the raison d'être for the station. If Channel 3 is going to be as important in the future as it has been in the past, the remit for ITV needs to be a lot stronger and a lot more comprehensive than these few throwaway lines that relegate it to the significance of Channel Five. Surely it is of far greater importance to our broadcasting ecology than that.

John Whittingdale: We should express our thanks to my hon. Friend the Member for South Cambridgeshire (Mr. Lansley), who has attempted to set out a definition of the public service remit for Channel 3. The result is probably about as good as one can get in a few words. I share the surprise, which was expressed on both sides of the Committee, that, under the Bill, public service remits for Channels 3 and Five appear to be the same. I remember the debates that took place when Channel Five was set up and I do not recall that it was intended that it should have the same public service remit as Channel 3. It was a new fledgling channel and its public service obligations were not as strong as those on Channel 3; that was correct. The Bill should reflect the fact that there are expectations on Channel 3 that go beyond those on Channel Five.

Michael Fabricant: Would my hon. Friend agree that, in those debates, it was not just a question of a possible different emphasis in the public service remits of Channels 3 and Five, but of a fundamental difference, given that Channel Five is a national network without regional variation, whereas the whole strength of Channel 3 is its regional variation and ITV licence structure?

John Whittingdale: My hon. Friend is entirely right. Some of us attended the reception given by ITV and ITN last night. It was encouraging that ITV saw its regional commitment not as an obligation that had to be met, but as a real strength and advantage. It not only welcomed its obligations to serve the regions, it saw those obligations as fundamental to the whole role of Channel 3. All of us welcomed that acknowledgement.
 I want to touch on the issue raised by my hon. Friend the Member for Ryedale (Mr. Greenway) in considering the earlier group of amendments. He mentioned the difficulties under which Channel 3 operates. When Channel 3 was originally launched, with very strong public service obligations, it was a completely different world. We were operating with a limited spectrum and only two, and then three, television channels were available. The fact that it was thought necessary for Channel 3 to be subjected to strong public service obligations was an acknowledgement of that, and I think that we would all agree with it. Since then, we have moved steadily further toward a multichannel world, which is putting great pressure on ITV. Recently published viewing figures for Christmas week showed that ITV's share had fallen below that of the multichannels for the first time. That is a significant development that is indicative of the pressure that ITV is under and the increased competition that it will inevitably face because many more channels are available and there is much greater choice for the viewer. 
 On top of that, it has been reported that ITV's share of the advertising market from end-of-year deals is down. The advertising market is not exactly robust at present and if ITV takes a smaller share, which is not surprising because so many more channels want to carry advertisements, it will be put in a difficult position. My hon. Friend the Member for Ryedale was right to say that if ITV's public service obligation is strengthened, there is a real danger that it will be subjected to a squeeze with decreasing revenues due to such factors as a smaller share of advertising market but at the same time it will have to spend more on meeting its public service obligations.

John Greenway: My hon. Friend makes a good point, but may I make one point to the Committee, after which I shall not try to catch your eye, Mr. Atkinson? On Sunday night, ITV showed the first episode of a new programme called ''The Royal'', which was born out of the successful ''Heartbeat'' series. The programme received 11.5 million viewers. Without a doubt, part of its success is because it is a programme made by Yorkshire Television reflecting life in north Yorkshire—which covers a large part of my constituency, and with which you will be familiar, Mr. Atkinson—30 years ago. It is not contemporary drama in that sense, but it is contemporary to when we were children at school. Does my hon. Friend agree that the key issue for the Committee is whether that programme exists because a provision in legislation says that making it is something that ITV must do, or because ITV took the view that the programme would be commercially successful and would redress the balance of the problem to which my hon. Friend referred?

John Whittingdale: My hon. Friend is right. High-quality programmes that fit the public service remit can attract many viewers, but that will not necessarily always be the case.
 Will the Minister consider what will happen when we have digital switchover? When that arrives, ITV will no longer operate as one of the few analogue broadcasters with a limited spectrum. It will have to 
 survive with all the other channels, but it has been suggested that it should still be required to have a public service remit that its competitors do not. It is difficult to justify that after digital switchover. Does the Minister envisage that the public service remit will be relaxed as we get closer to digital switchover? 
 I draw Committee members' attention to an interview with Greg Dyke that appeared in the Financial Times last week. He made an interesting comment that might surprise Committee members: 
''If you are a commercially funded broadcaster and you lose share year-in and year-out, in the end you fall off the cliff unless you change your cost base. And that's the process ITV is going through . . . You reduce your expenditure on regional programming, you reduce your expenditure on children's programming, you reduce your expenditure on serious programmes. This isn't a criticism that's what they've got to do.''
 The director-general of the BBC said that ITV would have no choice but to move away from its public service remit. I was surprised to read that, and I am unsure whether I would agree with him that that is what ITV should be doing, but on the other hand it is a recognition of the fact that ITV is now in a difficult position that is unlikely to improve. Therefore, I agree with the points that my hon. Friend made earlier about the need for us to be careful about loading more and more obligations on to ITV at a time when it is struggling if we wish to see the long-term survival of Channel 3 as a major player in British broadcasting.

Kim Howells: First, I wish to agree with something that the hon. Member for South Cambridgeshire said this morning. It seems as if he said it many hours ago now—days even—but it was a very important point. He reminded the Committee of the distinction between regional programme production—for which quotas are provided under clauses 276 and 278, and which were discussed in relation to previous groups of amendments—and regional programming, which is concerned with ensuring the supply of programmes of particular interest to viewers within the individual regions. Regional programming quotas for Channel 3 are provided in clause 277, which we will come to.
 I also wish to add my support to statements that were made by hon. Members on both sides of the Committee Room about the fact that ITV regards its regional structure—and, more importantly in a sense, its ability to conceive and make programmes in those regions—as one of its great strengths. I believe that that is the case. Last night, I was privileged to be present at the celebration of the previous launch of the ITV News Channel—as, I think, were other Committee members. It was remarkable that everyone who spoke said that what made this news channel different from others was the fact that it saw itself as very much rooted in the regions, and that it tries to tap the potential of that and turn it into news, especially with regard to breaking news in the regions: that is another cliché, like ''broadcasting ecology''—I am sure that Committee members know what I mean.

Michael Fabricant: To reinforce the Minister's report, it was interesting that the card that was
 produced at the launch of the ITV News Channel describes it as ''a specialist regional news programme'' and that it talks about the strength of the ITV network as being founded on the regions—so, there it is in blue and white, if not in black and white.

Kim Howells: I am grateful to the hon. Member for Lichfield (Michael Fabricant) for that: he is very good at coming up with published statements, and long may he thrive—although not necessarily as an hon. Member of this House.
 The full remit for each public service broadcaster encompasses both the tier 2 and tier 3 obligations. Therefore, the remit of Channel 3 is determined not just by the tier 3 requirements imposed under clause 257, but by the various requirements under tier 2, including the regional programme obligations under clause 277. 
 Channel Five has no regional programme obligations; I believe that the hon. Member for South Cambridgeshire mentioned that first, although other hon. Members also reminded us of it. Therefore, the full remits that apply to Channel 3 and to Channel Five are not identical, as I will try to make clear. The most obvious difference is that Channel 3 is subject to the regional programming requirement that is set out in clause 277. That does not apply to Channel Five, which does not have a regional programming function. That apart, both channels are subject to the various tier 2 quotas, which are confirmed by Ofcom.

Simon Thomas: I am afraid that the Minister is undermining his own argument. I thought that during his outlining of the case he had more or less accepted the point made by the hon. Member for South Cambridgeshire that there was a material difference in the nature of programming and programme making. In rejecting the hon. Gentleman's amendment, it seems that the Minister is relying on the programme quota once again and is saying that that is another part of the public remit. Surely, if we are to see that programme-making part reflect properly the regional identity of ITV, it needs to be changed in the tier 3 part and in the other parts that he has already mentioned; otherwise, his acceptance of the hon. Gentleman's argument does not hold water.

Kim Howells: I am grateful to the hon. Gentleman for thinking ahead. I have not rejected anything yet, but I will. Perhaps that is what he means.
 Ofcom will be able to set different quotas for each broadcaster, taking account of their position within—if I can use that awful term, since it is becoming normal in this Committee—the overall PSB ecology. The distinction between Channel 3 and Channel Five cannot be properly reflected in that way. 
 My hon. Friend the Member for Gloucester (Mr. Dhanda) and the hon. Member for Ryedale raised the issue of the economic importance of jobs and I would add to that the importance of many other factors. ITV companies have, in my experience, often been at the centre of the development of creative industries and that is the fastest growing sector in employment terms. It is not just that people are directly employed in that sector, the spin-offs and the partnership work relating to that sector often give a 
 region a creative identity that it might not otherwise have. 
 Regional production will be a key feature of the new regime. The tier 2 requirements include a provision for Ofcom to determine regional production quotas in consultation with the broadcasters concerned and to enforce those through the licensing regime or, in the case of the BBC, through the agreement. I hope that my hon. Friend the Member for Gloucester accepts that that will give some protection to jobs in that sector. 
 I suspect that in the end any of the businesses will survive, or fail, depending on how good they are. We have talked many times during Committee sittings about the new competition that is out there, whether that comes via satellite, cable or terrestrial. No company, however much it is regionally based, will be able to carry parts of its organisation that cannot hack it, or pull their weight. That should worry all of us who care about broadcasting in this country. I believe that the companies will survive; I am convinced that there is a huge amount of creative talent out there. That creative talent must, however, manifest itself in imaginative approaches to the programmes that are made and the way in which those are produced, and so on. 
 By the way, I attended the launch of the new service last night. Regarding that, I remember when BBC Radio Five Live was launched and everyone said, ''Why on earth would anybody want a rolling news programme? No one will listen to it. They only want to hear the news once every two hours.'' There are currently three rolling television news services—for a while we almost had four—and everyone is confident about them. I understand that 3 million people watch the ITV news channel, Sky News is very good and respected and BBC News 24, after its initial teething troubles, also seems to have a big, consistent audience. We must think about that. I sympathise with trade unions and managers who say, ''We must protect the jobs in that region.'' The best way to protect those jobs is to ensure that they produce imaginative, good programmes, which will sell and be watched. If people do not want to watch them, and no one wants to buy them, they will fail. It is as simple as that. We must do whatever we can through the regulatory system to ensure that they have every opportunity to succeed, but we can never guarantee that success. 
 Amendments Nos. 303 and 467 seek to give Channel 3 services an obligation to reflect cultural and regional diversity in the United Kingdom. Currently, the Channel 3 and Channel Five remits are to provide a range of high-quality and diverse programmes. Only the Channel 4 remit currently includes an obligation to appeal to the tastes and interests of a culturally diverse society. We had a short debate this morning, largely on the back of the contribution of the hon. Member for South Cambridgeshire, on the difficulty of defining such terms. He put up a very convincing argument. 
 Amendment No. 393, tabled by my hon. Friend the Member for Glasgow, Anniesland (John Robertson), 
 amendment No. 347, tabled by the hon. Member for Ceredigion (Mr. Thomas) and amendment No. 528, tabled by the hon. Member for Sheffield, Hallam (Mr. Allan) and moved by the hon. Member for North Devon (Nick Harvey) this morning all seek to include in Channel 3's public service remit, in slightly different ways, an obligation to provide distinct regional programming and programmes made outside the M25 area. 
 Despite the attentions, as the hon. Member for North Devon put it so vividly this morning, of cunning lawyers who would mangle the remit, terms and license conditions of Channel 3 licences, we believe that the remits for Channel 3 and Channel Five are pretty solid and clearly defined. I know that he will disagree but, in principle, we do not think that those remits should single out particular aspects of the overall public service remit. Channel 4's remit includes innovation, cultural diversity and educational programmes because of the channel's historic role and its distinctiveness in the terrible broadcasting ecology, about which we keep talking. 
 We do not think it right to apply obligations for cultural diversity, production outside the M25 or regional programming to the public service remits of Channels 3 and Five. Our approach to the qualitative aspects of public service broadcasting is to frame the remits for individual broadcasters in a way that reflects a spectrum of obligations, ranging from the BBC at one end to Channel Five at the other. On that basis, the way in which the Bill formulates the remits of Channels 3 and Five seems to us to be right. 
 It is not an insult to Channel Five to say that it is at one end of the spectrum while BBC 1 is at the other end. For quite a while, there have been rather better arts programmes on Channel Five than I have seen on BBC 1, although I know that BBC 1 has tried to address that recently. I hope that the Committee catches the drift of my remarks.

Michael Fabricant: The Minister referred to the concerns expressed by the hon. Member for North Devon. Can he confirm that if ITV were sold as one group, the individual regional licences would not change in any way? Is that enshrined in the Bill, so that Ofcom could not change those licences even if, to use the example given, AOL/Time Warner said that it wanted to operate everything from one centre?

Kim Howells: Yes, I believe that that is enshrined in the Bill. I am confident of that and think that the conditions imposed on those licences reflect the desire to ensure that the regional presence and character of ITV continue. I can guarantee that that subject will be open to vociferous and public debate if and when ITV has a single owner. The hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) quoted from an article by Greg Dyke. If a new owner starts to tinker with or rationalise production outside the M25 area, there will be vociferous debate and Ofcom will have the power to do something about it.
 All broadcasters will be required to contribute to fulfilment of the overall public service broadcasting remit, which includes commitments to reflect the lives 
 and concerns of different communities and the different cultural interests and traditions within the United Kingdom. Broadcasters will also be obliged to provide an appropriate range and proportion of programmes made outside the M25 area. I realise that I have not addressed all the issues raised by hon. Members.

Andrew Lansley: The Minister referred to the requirement on local Channel 3 services to reflect cultural interests and traditions in their areas. Where in the clause is that provided for?

Kim Howells: I am sure that I will receive a note telling me the answer to that and we will debate clause 277 later. In the light of what I have said, I hope that the hon. Gentlemen will withdraw their amendments.

Andrew Lansley: The Minister will be disappointed in his hope that, although he will live long and prosper, my hon. Friend the Member for Lichfield may not necessarily do so in the House of Commons. I suspect that he will see out the rest of us or turn into a national treasure. He is probably already looking forward to the Broadcasting Act 2025.
 I am disappointed by the Minister's reply. He seemed to say, ''Channel 3 is distinct from Channel Five because it has regional production and programming. Those two requirements are expressed in clauses 276, 277 and 278. That is part of the remit, so we do not need to have a different remit in clause 257. So, that is all clear''. However, it is clear only to the extent that clauses 276, 277 and 278 do indeed adequately specify additions to the Channel 3 remit that comprehensively explain the differences between Channel 3 and Channel Five. That is satisfactory only to the extent that it is clear in the structure that is being created in the clauses, as distinct from that in the Broadcasting Act 1996. 
 If there is a special duty or specific requirements and quotas and there does not need to be an intermediate expression of the remit in order to fulfil the proper hierarchy of responsibilities, that begs the question, ''What is the purpose of expressing the remit at all?'' If it were not there, there would still be requirements on Channel 3, and, if the Minister required it, the licence would be able to take such things into account. It feels as though the remit is being driven by clause 256, and that the remits of the channels are being driven by the nature of the reports and the factors to which Ofcom must have regard. 
 For example, to return to my point about clause 277, in clause 256(6)(h) one of the ways in which the purposes of public service television broadcasting can be fulfilled is 
''that those services (taken together) include what appears to OFCOM to be a sufficient quantity of programmes that reflect the lives and concerns of different communities and cultural interests and traditions within the United Kingdom, and locally in different parts of the United Kingdom''
 so we are in the same territory as my amendment. 
 Ofcom will have regard to such factors: they must be taken into account. Is that requirement laid upon Channel 3 in clause 277? I have looked and I do not see it there. In so far as it is not laid on Channel 3, is it comprised in the remit of Channel 4? Yes, to an extent, 
 as clause 257(3) refers to the cultural diversity and different tastes and interests included in the public service remit for Channel 4, but not necessarily at a regional and local level. Is there a gap, or will it be sufficient that, if Ofcom must have regard to such matters in its report, Channel 3 will have to follow through? That is not satisfactory. If a wide range of programmes reflecting various tastes and interests are expressed as a general duty, in so far as there are not specific quotas, there should be a general remit to translate that into each of the channels. 
 Channel 4's specific remit has been recognised from the past and will be carried forward. Channel 3's specific remit to reflect diversity at regional and local level because its networks can divide into local services, too, is not reflected sufficiently into the quotas. It should not be delivered only through quotas. It is not sufficient for such matters to be delivered, simply because Ofcom will report on them.

Kim Howells: The hon. Gentleman is right that that form of words is not contained in clause 277. However, clause 277(7)(a) contains words that should go some way to satisfy him.

John Greenway: The words are contained in subsection (1)(a).

Kim Howells: Yes. I missed that.

Andrew Lansley: The subsection refers to
''a suitable range of programmes . . . of particular interest''.
 I accept that, but it does not contain the diversity that is reflected in clause 256(6)(h), which covers Ofcom having regard to 
''different communities and cultural interests and traditions'',
 which is much closer to the language of amendment No. 303.

Simon Thomas: The Minister is trying to say that little bits of obligations are placed on Channel 3, which must be taken together to form a public sector remit, and on which Ofcom will be charged with reporting. Surely, a way in which to achieve a much more robust and sustainable Bill would be if such matters were brought together in one convenient part of it. The bringing together of all the different bits means that Ofcom will have to scrutinise whether Channel 3 has done this bit or that bit right or met certain obligations, and that will be the weakness in the Bill. It still does not outline the difference between Channel 3 and Channel 5.

Andrew Lansley: I am grateful to my co-signatory to the amendment. We are of one mind. To cut to the chase, our argument is that the subsequent quota requirements are not necessarily sufficient. The purpose of clause 257 is to set out a general remit, a high level statement about the distinctive character of a channel and its public service obligations, of which subsequent aspects may be specified and to which particular requirements may be attached. Otherwise, the risk is that the only extent to which Channel 3 believes that it has regional and local programming obligations is that specified under clause 277.
 If such obligations are not specified by Ofcom, they will not be regarded as part of the remit. The remit 
 should go wider than what is specified by Ofcom under clause 277. The idea that Channel 4 has a distinctive character that has been carried forward from previous legislation—but Channel 3 does not—seems to be contradicted by our knowledge and experience. Under section 16 of the Broadcasting Act 1990, Channel 3 has a range of specific requirements, most of which have been carried forward under the Bill. The implications of the Act were that Channel 5 had a distinct and separate public service character from Channel 3. I have heard no argument that convinces me that there is not every reason for there to be in clause 257 the intermediate expression between the general duty and some factors that must be specified in quotas, and the distinctive character of Channel 3. 
 I said previously to the Minister and the Committee that I do not want to press amendment No. 303 to a Division because it is too important a matter for me simply to say, ''I wrote it and therefore it is the right thing.'' It should be the basis of further careful consideration. I hope that the Minister will tell us whether he regards the matter as closed, because we do not.

Kim Howells: I would be delighted to say yes to that. I do not think, to paraphrase the hon. Member for Ceredigion, that the proposal is bits and pieces all over the place, but if the hon. Member for South Cambridgeshire would like me to explain in writing where the remit lies, I will certainly do so.

Andrew Lansley: I am always a seeker after truth and enlightenment so I will not dispute that, but rather than the matter should be explained to me, I hope that it might be reconsidered by the Government.

Michael Fabricant: Will my hon. Friend give way?

Andrew Lansley: We should move on. There will be further opportunities to discuss this in the course of our proceedings or on Report. I hope that the Government will consider it further. Most Conservative Members reckon that Channel 3 has a distinctive remit and that it ought to be expressed separately. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 257 ordered to stand part of the Bill. 
 Clauses 258 to 260 ordered to stand part of the Bill.

Clause 261 - Changes of service policy

Question proposed, That the clause stand part of the Bill.

Michael Fabricant: I want to raise a brief point that harks back to a debate this morning. Clause 261 and indeed previous clauses mentioned Teletext. I should like the Minister to explain why Teletext is included, but the famous related websites produced and promoted by BBC television and radio, and by Channel 4 and Channel Five, are excluded, because in a way they, too, are the text presentation of services that are related to broadcasters. I am aware that
 Teletext is also independent of existing broadcasters, but it is provided by BBC and ITV as well as being an independent service. I hope that the Minister follows my drift.

Kim Howells: I did not entirely, no. I am sure that the hon. Gentleman will explain it further to me, but I think that he will admit that Teletext and the internet are very different things. I appreciate his point about what we see on the screen and what people expect from it, but it would cross rather too far over that wobbly frontier about which we have spoken. I would argue that Teletext is within the remit of the Bill, whereas to step that little bit further over would put us outside that remit.
 Question accordingly agreed to. 
 Clause 261 ordered to stand part of the Bill.

Clause 262 - Enforcement of public service remits

Simon Thomas: I beg to move amendment No. 348, in
clause 262, page 230, line 24, leave out from 'serious' to 'and' in line 25.
 I do not wish to delay the Committee for too long, but we should consider the import of the clause and my amendment. It would remove from clause 262(2)(a) the words: 
''Ofcom are of the opinion that the failure of the provider is serious and is not excused by economic or market conditions''.
 I do that because I was struck by the force of the get-out clause, which allows Ofcom not to deal with public service remits if certain market or economic conditions apply. Of course, I accept that market conditions are essential considerations in determining whether Channels 3, 4 and Five meet their public service remits. It may be a long way away—the BBC is not funded in that way at present—but there may come a time when the BBC's public service remit might be dependent on the resources that it gets some other system of funding. 
 The provision in subsection (2)(a) is covered by subsection (3)(e), which says that Ofcom must have regard to 
''general economic and market conditions affecting generally the providers of television programme services or the providers of television multiplex services, or both of them.''
 There is therefore a tautology in the clause, in that Ofcom must twice have regard to market conditions. To me, the effect is to make market conditions the supreme factor in Ofcom's considerations. We discussed in previous debates the role of Ofcom as an economic regulator and its role in serving public interests, and I certainly agree that Ofcom must have regard to general economic and market conditions when considering whether a broadcaster has met its public service remit, but I do not understand why clause 262 will not apply if Ofcom simply forms the opinion that the failure to provide is serious. If the failure is serious, perhaps the provider's licence should be removed or other aspects of the service reformed. If there is a general failure in the market conditions, surely that affects all broadcasters, not just the public 
 service broadcaster. I accept that economic and market conditions are an important consideration for Ofcom, but I am concerned that they are being placed above the public service remit. 
 This aspect of the Bill comes down to the fact that a long time ago we privatised our spectrum and allowed private companies to use it for entertainment, education and, generally, for profit. In doing so, we set aside certain parts for Channels 3, 4 and Five—though we seemed to slip back on that in the last debate—and we reflect in the public service remits that we give to broadcasters the type of broadcasting environment that we want in order to provide a diverse range of programmes in the different parts of the United Kingdom. It would be a very worrying trend if we were to set all that to one side and say that such requirements can be thrown out if market conditions dictate. I am not aware that that is the current position, but I ask the Minister to give some indication of the ITC's approach to such issues. Our approach over the years has been to say that the public service remit is the overriding principle. Clause 262 seems to make the principle of market conditions more important than that of the public service remit. 
 While I am happy to accept that Ofcom will take into account market conditions when making any assessment of the failure or otherwise of any broadcaster to fulfil its public service remit, the wording of the Bill places too much emphasis on them. It provides a get-out clause that clever lawyers and accountants could use on behalf of an unscrupulous future owner of one of our independent broadcasters to get out of its public service remit. That would be a sorry day indeed.

Richard Allan: I am sorry that I missed this morning's sitting, but I had to attend the Liaison Committee sitting—that is another hat that I wear.
 I, too, was struck by the curious phrasing in the clause. Other legislation shows that it is curious to have so up-front a defence. Imagine that we decided that other offences, such as theft, should be punished unless excused by ''market or economic conditions''. The normal presumption in legislation is that regulatory action should be taken and the defence is set out below; in this Bill, the defence is incorporated into the phrase that instructs the regulator to take action. I would be more comfortable if, as the hon. Member for Ceredigion explained, the clause stated clearly that such enforcement action was anticipated, and then stated that such things as market and economic conditions could and should be taken into account when enforcement action was being taken. 
 It is also curious phrasing to say that the offence must be ''serious'' but to set no level of seriousness in respect of the ''market and economic conditions''. The clause gives Ofcom quite a high threshold to take action in the first instance against those who are believed to have breached their public service obligations, but those individuals can present almost any form of rationale using ''current economic or market conditions'' as the basis of their defence. There is no suggestion of a threshold for negative conditions and the ''It was the market made me do it, guv'' 
 defence. The clause does not say that the market must be in serious difficulty before that defence is brought into play. 
 A recurrent theme of our debates has been the difficulties that independent television, especially Channel 3, has recently faced, and we are all sympathetic. We understand that the future might hold revenues seriously declining in the long term, which should provide a defence for, for example, Channel 3 if it were having difficulty fulfilling its public service obligations. However, there would have to be serious difficulty in the market. Given that we have, rightly, not given Channel 3 leeway to drop its obligations in the current climate, the market conditions would have to be even more serious than the current negative market. I do not think that hon. Members on either side of the Committee have suggested that the current difficult market somehow provides Channel 3 with a get-out from its public service obligations, and Channel 3 has not argued for that. 
 The phrasing in the clause in curious and I hope that the Minister can assure us that we are not providing—I shall not use a clever lawyer's phrase—too easy a defence for cases in which Ofcom should be taking action in the public interest.

Kim Howells: First, I do not think that the defence here is unusual, as the hon. Member for Sheffield, Hallam says it is. Existing provisions on newspaper mergers of the Fair Trading Act 1973 provide the regulator with discretion in certain economic circumstances, as such provisions must.
 The hon. Member for Ceredigion helped to start a radio service in west Wales, so he will be the first to admit that if one tries to unpick the equation that makes a successful broadcaster, one finds that one of the chief variables is market conditions. To turn his argument on its head for a moment, to try to ignore economic conditions is ludicrous: we could end up with the best possible regulation, and a perfect defence of public service broadcasting, causing a company to go bust. Where is the sense in that? Clearly, the regulator must look at such situations very carefully. 
 Amendment No. 348 would prevent Ofcom from taking into consideration whether a licensed broadcaster's failure to fulfil its public service remit might be excused by economic or market conditions.

Michael Fabricant: What the Minister is saying is borne out by history. He may recall that the first two licensed companies ever to go bust under the old Independent Broadcasting Authority were not television, but radio. The first was Centre FM in Leicester and the second was Gwent Broadcasting, not a million miles away from him. That was because of over-regulation in a difficult market.

Kim Howells: I cannot remember exactly why Gwent Broadcasting went bust, but I remember doing lots of interviews about it.
 The Bill makes provision for Ofcom to determine not to use enforcement powers if it considers that the broadcaster's failure is serious but is excused by economic or market conditions. That applies both to 
 the broadcaster's fulfilment of his individual public service remit and to his contribution to the overall purposes of public service broadcasting, on which Ofcom will report no more than every five years. Although we want to ensure that Ofcom has power to intervene when necessary in order to maintain quality, it is neither realistic nor reasonable to ignore the impact of economic and market conditions on the ability of licensed broadcasters to fulfil their remits. As the Committee will appreciate, licensed broadcasters operate in a commercial market and are affected by external market conditions, such as those affecting advertising revenue. 
 I am not sure whether it was the hon. Member for Ryedale who said this morning that if broadcasters cannot hack it, they should stand aside. That may well be what Ofcom decides. I can see the force of that argument, but we also have to be realistic. As the hon. Member for Lichfield said, there have been cases in which companies have gone bust because of economic conditions, no buyers have come forward, and we have therefore been deprived of a service. Even if a service were inadequate in many ways, I would prefer that it continue to exist.

John Greenway: I agree with the Minister, but the argument goes even wider than he suggested. We are trying to anticipate what will happen in future. I would guess that if anyone asked now whether the term ''diverse programming'' included coverage of sport, the most likely answer would be yes, but it is conceivable that sports rights will become so expensive that Channel 3 will not be able to afford them. Heaven forfend that that should happen, but if it did, Channel 3 would be in breach of the subsection that the hon. Member for Ceredigion wishes to be amended, but for the words that he wishes to delete.

Kim Howells: Absolutely. There has been a recent example of that: a service for which there were high hopes and which had a lot of money invested in it failed partly because of the nature of its contractual relationship with the very bodies—football clubs and their association—that were seen as some of the main drivers for the channel.

Simon Thomas: The examples that have just been given are relevant to the debate, but it could be argued that, in the case of ITV Digital, serious business mistakes were made. Too high a price was paid, so in business terms the company was badly led. What comfort can the Minister give that the provisions will not be a cop out for bad business practice by bad holders of franchises, and that they will not enable bad businesses to get out of their public service remits?

Kim Howells: That is a fair point. It would be for Ofcom to determine whether the failure was excused by economic or market conditions, although it would have to consult the relevant service provider before taking enforcement action. I hope that I have answered the point.
 I hope that in the light of what I have said, the Committee will agree that the approach to enforcement of public service remits set out in the 
 Bill is the right one. I hope that the hon. Member for Ceredigion and his supporters will withdraw the amendment.

Simon Thomas: The Minister's reply to this short debate has rather oversimplified my position. Let me make it clear that in no sense do I oppose the use by Ofcom of market and economic conditions to consider how a broadcaster has met or not met the public service remit. That is covered in the Bill. Subsection 3(e) gives sufficient protection and comfort to Ofcom and anyone operating under a public service licence in the UK. It lets such individuals know that if there are genuine market difficulties, they will not be pulled out of the game and substituted by another player. However, I am concerned about how open-ended the clause might be in the hands of an unscrupulous operator who has taken over Channel 3 and sucked out its resources to invest overseas, which would leave that public service broadcaster in the UK in a weak position and unable to cope with a public service remit.

Michael Fabricant: The question is not only how unscrupulous a future ITV owner might be, but how gullible Ofcom might be. If one assumes that Ofcom will not be gullible, it will not fall for such a ploy.

Simon Thomas: I accept that, but we do not know what Ofcom will be like. One of the difficulties with the Bill is that on several occasions when I and colleagues have raised such questions, the Minister has said that the matter is for Ofcom to decide. I can well imagine that, in two or three years' time, hon. Members will be having Adjournment debates on certain decisions—or non-decisions—taken by Ofcom that they are not happy about, but by then it will be too late, because we are giving Ofcom powers now to take such decisions. Nevertheless, I do not have much support for the amendment at this stage, so rather than detain than Committee, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 262 ordered to stand part of the Bill. 
 Clause 263 ordered to stand part of the Bill.

Clause 60 - Must-carry obligations

Brian White: I beg to move amendment No. 503, in
clause 60, page 60, line 25, after 'form', insert 
 ', is comprised in the Home Services as defined in the BBC Charter'.

Peter Atkinson: With this it will be convenient to discuss the following:
 Amendment No. 491, in 
clause 60, page 60, line 31, at end insert— 
 '(g) any local digital television service; 
 (h) any access radio service'. 
Amendment No. 504, in 
clause 60, page 61, leave out lines 4 and 5 and insert— 
 '(a) the extent to which the service contributes to the purposes of public service television broadcasting;'. 
Amendment No. 505, in 
clause 60, page 61, line 16, at end insert— 
 '(e) in determining whether it is appropriate for the purposes of subsection (6) to add a service to the list of must carry services, the Secretary of State must, in having regard to the matters specified in subsection (7)(c) and subsection (7)(d), have regard to any representations made by a provider of a network to which conditions set in accordance with this section apply concerning the ability of that provider to use the capacity for broadcasting or transmitting the service by means of that network for another purpose and, in particular, the ability of that provider to derive income from the use of the capacity for another purpose.'.
 My co-Chairman indicated this morning that he would be happy to have a wider debate than normal on the first group of amendments dealing with must carry and related matters, but if hon. Members have technical points that they want to raise on subsequent clauses, perhaps they should wait until those clauses are debated.

Brian White: My amendments are a small part of the must-carry debate which will be dealt with through amendments other than mine, which deal with cable and the related list set out in the clause. I would have loved to begin by declaring that NTL provides 40,000 customers in Milton Keynes with digital television but, unfortunately, we are stuck in the analogue mode with little prospect of going to digital, although that is the subject of ongoing discussions.
 The reference to the BBC in the clause is intended to narrow its scope to exclude commercial services, such as those produced by BBC Worldwide. My concern, which is shared by several people who have raised the issue, is that there is no reason why the BBC should not produce non-licence fee-funded services that are commercial in nature within the corporation itself. My first amendment borrows language from the BBC charter that refers to ''Home Services'' to deal with the disquiet—I think it is more perceived than actual—that the BBC's commercial ambitions are going to be pushed through with must-carry obligations. The Secretary of State should consider that and be explicit about the BBC's role. As always, I am being helpful to the Government in tabling the amendment. Amendment No. 504 would focus the must-carry obligation more narrowly on public service broadcasting benefits, and by imposing such obligations would ensure that the service has to meet a hurdle that prevents opportunistic attempts to obtain must-carry status on the basis of vague unquantified statements. That would make the process more specific. 
 I have drafted amendment No. 505 as it is because the Government have made it clear that they intend the opportunity cost of set-aside capacity on cable for must-carry purposes to be addressed in the evaluation. The Secretary of State made a speech about that just before Christmas. Amendment No. 505 makes that point explicit. There are a significant number of economic costs to must carry. Unlike satellite, cable has a dynamic capacity, and the amendment addresses that issue. Although the must-carry list may not be a problem at the moment, if it were substantially to expand, the anomaly could begin to damage the cable sector. Simply to prove how prescient the cable 
 operators' fears are, I suggest in amendment No. 491 increasing the items included in must carry. That follows on from last Thursday's debate on the problems that community media have had in negotiations on access to the cable network. 
 In conclusion, the cable side of must carry is key. I look forward to the Minister's response, which will allow us to get on to the bloodletting associated with the rest of must carry.

Richard Allan: Briefly, in response to the hon. Member for Milton Keynes, North-East (Brian White), I have tried to look into some of the issues surrounding cable. I wonder whether the Minister will look at the differential impact of must carry on operations that depend on potential capacity, which is an issue that the amendment is intended to tease out. I know that we will have a wider debate later on, but he is trying to achieve a level playing field between very different technologies. The cable point is particularly important. Furthermore, the digital terrestrial platform has the greatest restriction on the number of channels available.
 Two of the amendments tabled by the hon. Gentleman tease out those issues. Amendment No. 504 would change the definition so that, rather than talking about public benefit in a general sense, we would be talking about public service broadcasting as a more specific benefit. The amendment raises some real questions, especially if one takes it in conjunction with amendment No. 491, which is in favour of local digital television and local access radio. 
 Where there is limited bandwidth and one is therefore stuck with a smaller number of channels, there may be some tough questions about whether public service broadcasting is better served by, for example, having a local digital television service or by having another children's channel, which the Secretary of State would properly define as a public service broadcaster, such as CBBC or CBeebies. Such a service will have some public benefit and will be properly defined as a public service broadcasting channel, but it will be in competition with other channels, which the cable provider may already be providing for children. How does one judge between that and, for example, a local television service, which has a different kind of public service broadcasting benefit, where there is limited bandwidth? 
 If the Minister is correct and the ecology of production takes off, lots of people will become interested in broadcasting and will want to make local television and take charge of their local media output, in which case we will have some real competition questions about the limited number of must-carry channels. I hope that he can explain how he perceives the tensions between the different platforms, particularly those between digital terrestrial, which is technically the most limited form, and cable, which is technically not quite so limited in terms of the potential number of channels, but carries a considerable additional cost. 
 My understanding is that as additional television channels are added to the cable platform, which can be done up to a greater number, each additional 
 television channel is the equivalent of lost revenue from quite a lot of the bandwidth that could otherwise have been sold to, for example, broadband customers. We want to encourage broadband and there may be a public benefit in adding television channels to the cable platform, but it is not without cost in terms of potential loss of additional broadband customers and other use of that cable capacity, which is, necessarily, limited by the technology.

Parmjit Dhanda: I hope that the hon. Gentleman is not saying that there is no significant need for a must-carry option. It is important to take into account the fact that, whoever the provider is—NTL, Sky, digital terrestrial and so on—consumers, too, are important. We should not forget that typical consumers who pay to watch sport have paid once to watch premiership football on Sky, and before ITV 2's problems they would have had to pay separately for a different platform to watch champions league football via cable. I hope that the hon. Gentleman is taking that into account.

Richard Allan: I am keen to have must-carry channels and I recognise that there is an important block of public service broadcasting that should be carried. I am trying to highlight a potential problem that arises if there is a finite number of channels and the number of must-carry channels increases. If there is a limit and it is set differently for the different technologies, there is a potential conflict if the public want to receive a type of service other than public service broadcasting.
 That is why the hon. Member for Milton Keynes, North-East is right to highlight local digital television access. The public might not be able to receive some public service broadcasting if the mandatory fixed national block of must-carry channels grows to the extent that it squeezes out other forms of new media that people want to get hold of. I am suggesting that that is a potential future conflict, particularly with cable and digital terrestrial. I am not suggesting that that is a reason not to have must-carry channels, but we must flesh out the issues in our debates to assure the platforms that they will be able to deliver want the public want.

Kim Howells: At the end of his contribution my hon. Friend the Member for Milton Keynes, North-East referred to the blood-letting that is about to flow from the must-carry debate. I do not know whether I heard him properly, but I hope that there will not be blood flowing all over the place.

John Greenway: It depends on whose blood it is.

Kim Howells: No one's blood.

Richard Allan: After the watershed.

Kim Howells: Clause 60 sets out the list of must-carry services. As far as the BBC is concerned, our firm intention is that only the digital television services provided by the corporation are included and that the services produced by BBC Worldwide will be excluded. One might argue that the corporation could also produce non-licence-fee-funded digital
 television services, provided that they obtain the consent of the Secretary of State. However, it is not our intention to give the BBC consent to provide any such services.
 Amendment No. 503 would insert a specific reference to the BBC's home services into the Bill. I do not consider that that is appropriate. It would not be right to define the relevant BBC services by reference to the charter, given that the charter is subject to change with each successive renewal and that any existing reference in legislation might be rendered obsolete. The Committee will be aware that the current charter expires at the end of 2006 and that the process of examination, discussion and renewal starts next year. 
 I reiterate that we intend to reserve the benefit of must carry to the public service channels provided by the BBC. In light of that brief explanation, I hope that my hon. Friend will withdraw the amendment, intriguing though it is. He will be disappointed to hear that I do not support amendment No. 491, either. We did not consider it appropriate to mandate the carriage of radio services, as they might be accessed through other means. As that is the case, we do not consider it appropriate to include access radio in the must-carry list, despite the intriguing arguments of the hon. Member for Sheffield, Hallam about what people think that they might need. We will have to consider that issue again, as it is interesting. 
 On local digital television services, I do not really believe that my hon. Friend the Member for Milton Keynes, North-East would think it appropriate for all such services, whatever their content, to benefit from must carry. Why should a local commercial service benefit from that? As the hon. Member for Sheffield, Hallam said, we must not forget that must carry is a heavy obligation imposed on network providers, and we have to take into account the financial implications that the addition of services in the must-carry list will have on them. Currently, we can find no justification for including such services on a must-carry list. However, subsection (4) requires the Secretary of State to keep the must-carry list under review, and subsection (6) enables the Secretary of State to add services to the must-carry list by order. 
 In deciding whether to make any change to the must-carry list, the Secretary of State is required by subsection (7) to have regard to a number of matters, including the benefit of the change to the public and the effects of such a change on the availability of capacity. That gives the Secretary of State the sort of flexibility that my hon. Friend the Member for Milton Keynes, North-East and the hon. Member for Sheffield, Hallam hinted at. As I say, the issue is important. We also have to consider the spare network capacity of providers of electronic communications networks, to whom the must-carry obligations apply, and must consider whether the burden of compliance is proportionate to the objective. 
 Amendment No. 504 proposes to amend the wording of one of the criteria to which the Secretary of State must have regard when reviewing the list of 
 must-carry services. It is not our intention to impose unreasonable charges on network providers, and we will make sure that we do not add any service that has no real value or provides no benefit to the public. That is why I resisted amendment No. 491. Our formulation, in terms of the public benefit secured by the addition to or retention of a service on the list, is clear and quite accurate. I am not sure that the words of amendment No. 504, 
''the extent to which the service contributes to the purposes of public service television broadcasting'',
 would give any more assurance, although I am all for having a crack at trying to improve the effectiveness of provisions and explaining what we want from them. 
 On amendment No. 505, I understand fully the concerns of the cable companies. It is not our intention to impose disproportionate or unreasonable burdens, or add lots of extra channels to the list of must carry. Even when a network has capacity, adding a channel to the basic package can decrease the attractiveness of the premium packages, as the hon. Member for Sheffield, Hallam said. I also understand fully that cable platforms are used not only for broadcasting but to give access to broadband services. I am told that the capacity used by one channel is equivalent to what is needed to serve half a million broadband subscribers, which is a pretty phenomenal statistic. We will not add any new service to the list of must carry without having regard to the opportunity cost, which is important. In the light of those explanations, I hope that my hon. Friend the Member for Milton Keynes, North-East will withdraw the amendment.

Brian White: I am totally devastated that the Minister has not accepted the amendment with alacrity. I understand that he accepts the problems in gaining access to some platforms and that there are differences between national and local networks. However, in light of what he has said, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Simon Thomas: I beg to move Amendment No. 212, in clause 60, page 60, line 31, at end insert—
(g) television services for the deaf and visually impaired so far as provided in digital form.'.
The amendment is narrowly defined but it is important to consider it at this stage. The Minister has outlined the thinking behind clause 60, mentioning particularly the public services that may be subject to must-carry obligations and any general conditions of Ofcom. However, something is missing. Many television programmes already provide audiodescription, subtitling and signing for the deaf and visually impaired. In analogue, those services are taken as read. However, an increasing digital divide is appearing. Services for deaf and visually impaired people are prepared with audiodescription, subtitling and signing but are not transmitted in that way.
 To the list of services that come under the must-carry obligations, amendment No. 212 would add 
''television services for the deaf and visually impaired so far as provided in digital form.''
 I emphasise that phrase ''so far as provided''. The amendment does not request an additional service; it requests that analogue broadcasts with subtitling, by the BBC for example, should, when transmitted digitally under a must-carry obligation, still carry the 
 subtitling. Some technical difficulties arise that will have to be dealt with. 
 If the Minister accepts amendment No. 212 in principle, it would have two effects. One would be to ensure that subtitling, audiodescription and signing were explicitly on the must-carry list, and the other would be to highlight to the Committee the need to ensure the widest possible access to audiodescription and other types of assistance. Such assistance will have already been prepared but, increasingly, it is not available to deaf and visually impaired people because of the technology that they are using at home. 
 The universal service directive states that 
'' 'must carry' obligations may include the transmission of services specifically designed to enable appropriate access by disabled users.''
 That raises the question of why such a statement is not explicit either in this clause or in any other clause in the Bill. 
 It may well be that, in stating services that are to come under the must-carry obligations—services on Channels 3, 4, Five, S4C digital and so on—the Minister and the Government have in mind the automatic inclusion of audiodescription, signing or subtitling with programmes. However, in the absence of anything to that effect being explicit in the Bill, it is worth while our exploring how such services can be delivered. 
 The present difficulty is that many visually impaired and deaf people cannot get subtitling or audiodescription on digital satellite services. As soon as the main broadcasters such the BBC or ITV transmit in digital, those aspects are lost. As a result, by the time an analogue public service broadcast with subtitling has gone up to a satellite and come back into a deaf person's home, it no longer has subtitling. That is a weakness in the present technology, which must clearly be dealt with. The Committee must concern itself with that and try to place it more specifically in the Bill, so that we know that we are protecting a publicly available service in the switch from analogue to digital. 
 The current provision exists on satellite. I am told by the Royal National Institute of the Blind, to which I am grateful for information, that Sky digital provides a good service that is expanding. It is good to hear that, but although it works technically and it works well, it is specifically a service for satellite. I am told that Sky uses software that is downloaded to the customer's digiboxes, so all they have to do is change to an audionarrative setting and they have an audiodescription in their own home. That open audio service is provided at no extra cost and I congratulate Sky for helping people with visual impairments to enjoy their programmes. The difficulty is that that only happens on Sky programmes and where it is provided otherwise. BBC, ITV, Channel 4 and S4C programmes may include an element of subtitling, signing, or any other access assistance. However, by the time that people get into the software, and those things get scrambled and unscrambled, the audio description is not there at the other end of the satellite system. 
 I have been provided, helpfully, with another example of what one could see, as it were, if one were audio-assisted. On Christmas day, people using Sky could, had they needed such a service, have had audiodescriptions of ''Aerobics Oz Style'', ''The Premiership Years'' and three films: ''The View from the Swing'', ''Special Delivery'' and ''Supergirl''. I admit that I have not heard of any of those films and I am not sure that I would have been encouraged to tune in to such programmes. By contrast, if people had been watching audiodescribed programmes provided by the public service broadcasters on analogue, rather than on digital, they could have enjoyed audiodescriptions of ''EastEnders'', ''Only Fools and Horses'' and ''Chicken Run''. I am not sure if those are more appealing than the Sky programmes, but they are at least more familiar. It is clear that visually impaired people are missing out on much programming that is being made technically available to them, but which is not being delivered through satellite channels. 
 The BBC spent money on the audiodescription of programmes this Christmas, in which only 45 visually impaired viewers, who were taking part in a trial of audiodescription on DTT, were able to participate. That shows how far we have to go. Why do we not require broadcasters to provide versions that are technically suitable for broadcast on Sky? My amendment would do that. Why do we not require the satellite operators and digital cable to carry such descriptions? 
 There will be technical difficulties and costs will be involved, but I am advised that there is enough bandwidth and that there would be no additional programme-making costs, because those audiodescriptions are already being made available. My amendment does not demand an increase in the amount of audiodescription, signing, or subtitling, it simply asks that what is already available is made available on digital satellite. 
 The BBC transmits its audiodescription differently from Sky, so a technical hurdle must be overcome. I am advised—I certainly do not know about the relevant technology—that it is possible to reroute the audiodescription signal through particular equipment and software, which would make the mix that Sky could then use to broadcast as part of the must-carry requirements. The digital divide is increasing for many visually impaired and deaf people and Freeview has not sorted out the problem of audiodescription. Accordingly, I hope that the Minister will accept, at least in principle, that there is a need for must-carry television PSBs to include, wherever possible, television services for the deaf and the visually impaired where those are already provided in digital form.

Kim Howells: First, I assure the hon. Gentleman that it is not the intention of the Government or Ofcom to retreat from targets set to aid the enjoyment of television by disabled people. I am sure that he received a terrific briefing from the Royal National
 Institute of the Blind. I was the Minister who organised the first conference that pulled together partners to try to understand the problems of audiodescription models. I have been rather disappointed by the RNIB's lack of urgency to get together with manufacturers, broadcasters and market researchers, although I might be completely wrong about that and not have heard about its actions. The hon. Gentleman did not mention whether the problem relates to the availability of the right technology or the cost of it and the willingness of people to invest. That is vague and it is disappointing that the issues have not been resolved. The Government can address the problems in a regulatory fashion—I shall address the amendment in a moment—but action and organisation by the partners is required. The partners have not made the progress that I assumed that they had made since the conference, despite the promises and undertakings that were given.
 I am glad that the hon. Gentleman paid tribute to BSkyB. It made important executive decisions to ensure that its services would address the important issues, and those decisions were voluntary because we do not regulate BSkyB. We know from our debate about S4C that the Bill will make subtitling compulsory, and S4C is enthusiastic about that in many ways. I shall fill in some of the background for the benefit of the hon. Gentleman. Audiodescription model technology is not proven and settled. I have seen excellent examples of the technology but it has not yet captured the imagination of the market. 
 I turn to the amendment. We want to ensure that the needs of disabled people are fully taken into account. If a channel has to be carried, the relevant aids to viewing available for the service are also carried, and the Bill already provides for that. Section 48(4) of the Broadcasting Act 1990 deems that licences for Channels 3, 4 and Five include the right to provide subtitling and section 15(3) requires a Channel 3 applicant to say how it would provide subtitling. Under section 24(2) of the Broadcasting Act 1996, subtitling, signing and audiodescription are ancillary services that benefit from the same requirement as the main service. 
 I shall restate an undertaking for the hon. Gentleman and the Committee: what is available on analogue will at least be available on digital, although everybody who looks at digital sees great advantages because of the possibilities of what could be provided for disabled people. We must consider that carefully. With those reassurances, I hope that the hon. Gentleman will withdraw the amendment. Although the debate is important, the amendment is superfluous.

Simon Thomas: I am grateful for what I think that the Minister said: what is available on analogue should be the minimum of what will be available on digital and there might be further opportunities to develop digital. However, I was a little surprised by his wider comments. I know that he likes to shoot from the hip, but the Government have a greater responsibility to drag things along. I am pleased that he called for a conference, but there needs to be a follow-up. Heads must sometimes be knocked together to get action.
 A feature of the DVD revolution is that an increasing number of films are automatically available with an audiodescription track. DVDs have tracks in Spanish, Greek, and so forth as well as audiodescription. They are tailor-made for broadcasters to use to provide extra services. I acknowledge the work that Sky has undertaken to date, but there are even more challenges and opportunities for broadcasters such as Sky and the public service broadcasters to prepare even better services. As more are produced, the costs drop.

Kim Howells: I agree entirely. Far from shooting from the hip, I have great admiration for the RNIB. I want to tell hon. Members what I perceive the truth to be. I am sorry if that offends people, but the issue is an important one. We can bumble along from now until analogue switch-off and we may be in the same position unless we apply greater urgency about getting the audiodescription module technology and the sale and research right.

Simon Thomas: I hope that that urgency will be applied, and that it will come from the Government as well as those organisations that have represented disabled people. It should also come from the broadcasters themselves as they realise the opportunity provided by digital switchover. Whoever is responsible for not achieving that, disabled, deaf and visually-impaired people will suffer the consequences of that lack of action.
 Bearing in mind that the Minister said that there should be no diminution from the change from analogue to digital, and that he will go back to his Department, pick up the minutes from that conference and reconsider how the Department can drag people into action, I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Question proposed, That the clause stand part of the Bill.

Peter Atkinson: With this it will be convenient to discuss the following:
 Amendment No. 210, in 
clause 348, page 299, line 10, at end insert— 
 ' ''must-distribute services'' means the services for the time being listed in section [conditions applying to satellite packagers];'
 Amendment No. 211, in 
clause 348, page 300, line 8, at end insert— 
 ' ''satellite package'' and ''satellite packager'' are to be construed in accordance with section [definition of satellite packaging];'
 New clause 9—Definition of satellite packaging— 
'(1) For the purposes of Part 3— 
 (a) a satellite package is a facility by the use of which a person is able, at a place in the United Kingdom, to receive a satellite television service in an intelligible form; and 
 (b) a satellite packager is a person who, in the course of carrying on a business, offers to supply such packages to members of the public. 
 (2) For the purposes of Part 3 a person supplies a satellite package to a member of the public if he confers an entitlement on that member of the public to have the package made available to him. 
 (3) In this section ''satellite television service'' means a service which— 
 (a) consists in or involves the broadcasting of television programme services from a satellite; and 
 (b) is used by a significant number of the persons by whom the broadcasts are received in an intelligible form as their principal means of receiving television programmes.'.
 New clause 10—Notification requirements for satellite packagers— 
'(1) A person shall not act as a designated satellite packager unless, before beginning to do so, he has given a notification to OFCOM of his intention to do so. 
 (2) For the purposes of this section— 
 (a) a person acts as a designated satellite packager if he acts as a satellite packager of a description for the time being designated by OFCOM for those purposes; and 
 (b) such a description may be framed by reference to any one or more of the following— 
 (i) the manner in which a satellite packager acts as such; 
 (ii) the circumstances of his so acting; 
 (iii) the characteristics of the services included in his package; 
 (iv) the programmes included in those services; and 
 (v) any other factors that OFCOM consider appropriate. 
 (3) Where a person has given a notification for the purposes of sub-section (1), he must, before ceasing to act as a designated satellite packager, give a notification to OFCOM of his intention to do so. 
 (4) A notification for the purposes of this section must— 
 (a) be sent to OFCOM in such manner and form as OFCOM may require; and 
 (b) contain all such information as OFCOM may require. 
 (5) Before— 
 (a) making or withdrawing a designation for the purposes of this section, 
 (b) imposing requirements under sub-section (4), or 
 (c) modifying requirements imposed under that sub-section, 
 OFCOM must consult such of the persons who, in their opinion, are likely to be affected by it as they think fit. 
 (6) OFCOM is only required to consult under sub-section (5) about modifications that appear to them to be likely to have a significant impact on persons affected by them. 
 (7) Before making or withdrawing a designation for the purposes of this section OFCOM must also consult the Secretary of State. 
 (8) The way in which a designation for the purposes of this section or a requirement under sub-section (4)— 
 (a) is to be made or imposed, or 
 (b) may be withdrawn or modified, 
 is by a notice published in such manner as OFCOM consider appropriate for bringing the designation, requirement, withdrawal or modification to the attention of the persons who, in their opinion, are likely to be affected by it. 
 (9) Requirements imposed under sub-section (4) may make different provision for different cases. 
 (10) Where a description of satellite packager is designated for the purposes of this section at a time when a person is already acting as such a packager— 
 (a) his obligation under this section to give a notification before beginning to act as such a packager shall have effect as an obligation to give a notification within such period after the coming into force of the designation as may be specified in the notice in which the designation is contained; and 
 (b) that notification is to be one stating that that person is already acting as a designated satellite packager (rather than it is his intention to do so).'.
 New clause 11—Register of designations and satellite packagers— 
'(1) It shall be the duty of OFCOM to establish and maintain a register for the purposes of section [notification requirements for satellite packagers]. 
 (2) OFCOM shall record in the register— 
 (a) every designation by them for the purposes of section [notification requirements for satellite packagers]; 
 (b) every withdrawal by them of such a designation; and 
 (c) every notification given to them under that section. 
 (3) Information recorded in the register must be so recorded in such manner as OFCOM consider appropriate. 
 (4) OFCOM shall make the register available for public inspection— 
 (a) during such hours; and 
 (b) on payment of such fees, 
 as they may by order prescribe. 
 (5) Section 388 applies to the power of OFCOM to make an order under sub-section (4). 
 (6) It shall be the duty of OFCOM to publish a notification setting out— 
 (a) the times at which the register is for the time being available for public inspection; and 
 (b) the fees that must be paid for, or in connection with, an inspection of the register. 
 (7) The publication of a notification under sub-section (6) must be in such manner as OFCOM consider appropriate for bringing it to the attention of the persons who, in their opinion, are likely to be affected by it.'.
 New clause 12—Conditions applying to satellite packagers— 
'(1) OFCOM may set such conditions applying to satellite packagers as OFCOM think fit for the purpose set out in sub-section (2). 
 (2) That purpose is securing that satellite packages supplied by those packagers in the course of acting as designated satellite packagers (within the meaning of section [notification requirements for satellite packagers]) include, in the case of every package, an entitlement to receive— 
 (a) free of charge, 
 (b) in an intelligible form, and 
 (c) by means of the satellite television service to which the package relates, 
 the services included in the list of must-distribute services. 
 (3) An entitlement to receive a must-distribute service is made available free of charge only if no charge attributable (whether directly or indirectly) to the conferring of that entitlement is imposed for or in connection with the supply of the satellite package in which the entitlement is comprised. 
 (4) The list of must-distribute services is as follows— 
 (a) any service of television programmes provided by the BBC so far as it is provided in digital form and is a service in relation to which OFCOM have functions; 
 (b) a Channel 3 service so far as provided in digital form; 
 (c) Channel 4 so far as provided in digital form; 
 (d) Channel 5 so far as provided in digital form; 
 (e) S4C Digital; 
 (f) the public teletext service. 
 (5) Conditions under this section that require an entitlement to be conferred as respects a service included in the list of must-distribute services must, to such extent as OFCOM consider appropriate— 
 (a) require the same entitlement to be conferred as respects every service which is an ancillary service by reference to a service included in that list; and 
 (b) provide for the services as respects which the entitlement is conferred to be treated, in relation to particular satellite packages, as constituting such services comprised in or provided with the listed service as may be determined by OFCOM. 
 (6) Before setting, revoking or modifying a condition under this section, OFCOM must consult— 
 (a) the Secretary of State; and 
 (b) such of the following as OFCOM think fit— 
 (i) the persons who are likely, in OFCOM's opinion, to be affected by the condition, revocation or modification; and 
 (ii) the persons who appear to OFCOM to represent such persons. 
 (7) The way in which conditions under this section are to be set or modified is by the publication of a notification setting out the conditions or modifications. 
 (8) The way in which such a condition is to be revoked is by the publication of a notification stating that the condition is revoked. 
 (9) The publication of a notification under sub-section (7) or (8) must be in such manner as appears to OFCOM to be appropriate for bringing the contents of the notification to the attention of the persons who, in OFCOM's opinion, are likely to be affected by its contents. 
 (10) The Secretary of State may by order modify the list of must-distribute services.'.
 New clause 13—Enforcement of sections [notification requirements for satellite packagers] and [conditions applying to satellite packagers]— 
 'Schedule [Enforcement of sections [notification requirements for satellite packagers] and [conditions applying to satellite packagers]] shall have effect.'. 
New clause 14—Power to modify satellite packager notification provisions— 
'(1) The Secretary of State may by order to modify sections [definition of satellite packagers], [notification requirements for satellite packagers] and [register of designations and satellite packagers] and Part 1 of Schedule [Enforcement of sections [notification requirements for satellite packagers] and [conditions applying to satellite packagers]] in such manner as he thinks fit. 
 (2) The power to make such an order is not to be exercised at any time after the commencement of section [notification requirements for satellite packagers]. 
 (3) Before making such an order the Secretary of State must consult— 
 (a) OFCOM; 
 (b) providers of the must-distribute services or persons appearing to him to represent those providers or both; and 
 (c) such persons not falling within the preceding paragraphs as appear to the Secretary of State to be, or to represent, persons likely to be particularly affected by the proposed order. 
 (4) No order is to be made containing provision authorised by this section unless a draft of the order has been laid before Parliament and approved by a resolution of each House.'.
 New schedule 1—'Enforcement of sections [notification requirements for satellite packagers] and [conditions applying to satellite packagers]— 
Part 1 
 Failure to notify under section [notification requirements for satellite packagers] 
 Notification of failure 
 1 (1) Where OFCOM determine that there are reasonable grounds for believing that a person has failed to give a notification that he is 
required to give by section [notification requirements for satellite packagers], they may give him a notification under this paragraph. 
 (2) A notification under this paragraph is one which— 
 (a) sets out the determination made by OFCOM; and 
 (b) specifies the period during which the person notified has an opportunity of doing the things specified in sub-paragraph (4). 
 (3) That period must be a reasonable period. 
 (4) Those things are— 
 (a) making representations about the determination; and 
 (b) providing OFCOM with the information which the notified person should have provided for the purposes of section [notification requirement for satellite packagers] but has not. 
 (5) A notification under this paragraph— 
 (a) may be given in respect of more than one contravention of section [notification requirements for satellite packages]; and 
 (b) if it is given in respect of a continuing contravention, may be given in respect of any period during which the contravention has continued. 
 (6) Where a notification under this paragraph has been given to any person in respect of a particular contravention of section [notification requirements for satellite packagers], OFCOM may give a further notification in respect of that contravention if, and only if— 
 (a) the subsequent notification is in respect of so much of a period during which the contravention in question was continuing as falls after any period to which the earlier notification relates; or 
 (b) the earlier notification has been withdrawn without a penalty having been imposed by reference to the notified contravention. 
 Enforcement notification for failure 
 2 (1) This paragraph applies where— 
 (a) a person (''the notified packager'') has been given a notification under paragraph 1; 
 (b) OFCOM have allowed the notified packager an opportunity of making representations about the notified determination; and 
 (c) the period allowed for the making of the representations has expired. 
 (2) OFCOM may give the notified packager an enforcement notification if they are satisfied— 
 (a) that he is or has been in contravention, in any of the respects notified, of section [notification requirements for satellite packagers]; and 
 (b) that he has not himself, during the period allowed under paragraph 1, taken all such steps as OFCOM consider appropriate for providing them with the information which he should have provided to them but has not. 
 (3) An enforcement notification is a notification which imposes a requirement on the notified packager to take all such steps for providing OFCOM with that information as may be specified in the notification. 
 (4) A decision of OFCOM to give an enforcement notification to any person must fix a reasonable period for the taking of the steps required by the notification. 
 (5) It shall be the duty of a person to whom an enforcement notification has been given to comply with it. 
 (6) That duty shall be enforceable in civil proceedings by OFCOM for an injunction, for specific performance of a statutory duty under section 45 of the Court of Session Act 1988 (c.36), or for any other appropriate remedy or relief. 
 Penalty for failure 
 3 (1) This paragraph applies (in addition to paragraph 2) where— 
 (a) a person (''the notified packager'') has been given a notification under paragraph 1; 
 (b) OFCOM have allowed the notified packager an opportunity of making representations about the matters notified; and 
 (c) the period allowed for the making of the representations has expired. 
 (2) OFCOM may impose a penalty on the notified packager if he has been in contravention, in any of the respects notified, of section [notification requirements for satellite packagers]. 
 (3) Where a notification under paragraph 1 relates to more than one contravention, a separate penalty may be imposed in respect of each contravention. 
 (4) Where such a notification relates to a continuing contravention, no more than one penalty may be imposed in respect of the period specified in the notification during which that contravention continued. 
 (5) OFCOM may also impose a penalty on the notified packager if he has contravened, or is contravening, a requirement of an enforcement notification given in respect of the notified contravention. 
 (6) The amount of a penalty imposed under this paragraph is to be such amount not exceeding £10,000 as OFCOM, having regard to the matters mentioned in sub-paragraph (7), determine to be— 
 (a) appropriate; and 
 (b) proportionate to the contravention in respect of which it is imposed. 
 (7) Those matters are— 
 (a) any representations made to OFCOM by the notified packager, and 
 (b) any steps taken by him towards complying with his obligations under section [notification requirements for satellite packagers]. 
 (8) Where OFCOM impose a penalty on a person under this paragraph they shall— 
 (a) notify the person penalised; and 
 (b) in that notification, fix a reasonable period after it is given as the period within which the penalty is to be paid. 
 (9) A penalty imposed under this paragraph— 
 (a) must be paid to OFCOM; and 
 (b) if not paid within the period fixed by them, is to be recoverable by them accordingly. 
 (10) The Secretary of State may by order amend this paragraph so as to substitute a different maximum penalty for the maximum penalty for the time being specified in sub-paragraph (6). 
 Part 2{**qc**} 
 Contravention of must-distribute obligations{**qc**} 
 Notification of failure 
 4 (1) Where OFCOM determine that there are reasonable grounds for believing that a person has contravened or is contravening a must-distribute obligation, they may give him a notification under this paragraph. 
 (2) A notification under this paragraph is one which— 
 (a) sets out the determination made by OFCOM; 
 (b) specifies the obligation and contravention in respect of which that determination has been made; and 
 (c) specifies the period during which the person notified has an opportunity of doing the things specified in sub-paragraph (4). 
 (3) That period must be a reasonable period. 
 (4) Those things are— 
 (a) making representations about the matters notified; 
 (b) complying with notified obligations of which he remains in contravention; and 
 (c) remedying the consequences of notified contraventions. 
 (5) A notification under this paragraph— 
 (a) may be given in respect of more than one contravention; and 
 (b) if it is given in respect of a continuing contravention, may be given in respect of any period during which the contravention has continued. 
 (6) Where a notification under this paragraph has been given to any person in respect of a particular contravention, OFCOM may give a further notification in respect of that contravention if, and only if— 
 (a) the contravention is in respect of so much of a period during which the contravention in question was continuing as falls after any period to which the earlier notification relates; or 
 (b) the earlier notification has been withdrawn without a penalty having been imposed with respect to the notified contravention. 
 Enforcement notification for failure 
 5 (1) This paragraph applies where— 
 (a) a person (''the notified packager'') has been given a notification under paragraph 4; 
 (b) OFCOM have allowed the notified packager an opportunity of making representations about the matters notified; and 
 (c) the period allowed for the making of the representations has expired. 
 (2) OFCOM may give the notified packager an enforcement notification if they are satisfied— 
 (a) that he is or has been in contravention, in any of the respects notified, of an obligation notified in the notification under paragraph 4; and 
 (b) that he has not himself, during the period allowed under that paragraph, taken all such steps as OFCOM consider appropriate for— 
 (i) complying with that obligation; and 
 (ii) remedying the consequences of the notified contravention of that obligation. 
 (3) An enforcement notification is a notification which imposes one or more of the following requirements on the notified packager— 
 (a) a requirement to take such steps for complying with the notified obligation as may be specified in the notification; 
 (b) a requirement to take such steps for remedying the consequences of the notified contravention as may be so specified. 
 (4) A decision of OFCOM to give an enforcement notification to any person must fix a reasonable period for the taking of the steps required by the notification. 
 (5) It shall be the duty of a person to whom an enforcement notification has been given to comply with it. 
 (6) That duty shall be enforceable in civil proceedings by OFCOM for an injunction, for specific performance of a statutory duty under section 45 of the Court of Session Act 1988 (c.36), or for any other appropriate remedy or relief. 
 Penalty for failure 
 6 (1) This paragraph applies (in addition to paragraph 5) where— 
 (a) a person (''the notified packager'') has been given a notification under paragraph 4; 
 (b) OFCOM have allowed the notified packager an opportunity of making representations about the matters notified; and 
 (c) the period allowed for the making of the representations has expired. 
 (2) OFCOM may impose a penalty on the notified packager if he is, or has been, in contravention, in any of the respects notified, of an obligation notified in the notification under paragraph 4. 
 (3) Where a notification under paragraph 4 relates to more than one contravention, a separate penalty may be imposed in respect of each contravention. 
 (4) Where such a notification relates to a continuing contravention, no more than one penalty may be imposed in respect of the period specified in the notification during which that contravention continued. 
 (5) OFCOM may also impose a penalty on the notified packager if he has contravened, or is contravening, a requirement of an enforcement notification given in respect of the notified contravention. 
 (6) Where OFCOM impose a penalty on a person under this paragraph they shall— 
 (a) notify the person penalised; and 
 (b) in that notification, fix a reasonable period after it is given as the period within which the penalty is to be paid. 
 (7) A penalty imposed under this paragraph— 
 (a) must be paid to OFCOM; and 
 (b) if not paid within the period fixed by them, is to be recoverable by them accordingly. 
 Amount of penalty 
 7 (1) The amount of a penalty imposed under paragraph 6 is to be such amount not exceeding ten per cent. of the turnover of the notified packager's relevant business for the relevant period as OFCOM, having regard to the matters mentioned in sub-paragraph (2), determine to be— 
 (a) appropriate; and 
 (b) proportionate to the contravention in respect of which it is imposed. 
 (2) Those matters are— 
 (a) any representations made to OFCOM by the notified packager; 
 (b) any steps taken by him towards complying with the obligation contraventions of which have been notified to him under paragraph 4; and 
 (c) any steps taken by him for remedying the consequences of those contraventions. 
 (3) For the purposes of this paragraph— 
 (a) the turnover of a person's relevant business for any period shall be calculated in accordance with such rules as may be set out by order made by the Secretary of State; and 
 (b) provision may also be made by such an order for determining what is to be treated as the business by reference to which the calculation of that turnover falls to be made. 
 (4) No order is to be made containing provision authorised by sub-paragraph (3) unless a draft of the order has been laid before Parliament and approved by a resolution of each House. 
 (5) The Secretary of State may by order amend this paragraph so as to substitute a different percentage for the percentage for the time being specified in sub-paragraph (1). 
 (6) In this paragraph— 
 ''relevant business'' means (subject to the provisions of any order under sub-paragraph (3)) so much of any business carried on by the person in respect of whose contravention the penalty is imposed as consists in the supply of satellite packages to members of the public; 
 ''relevant period'', in relation to a contravention by any person of a must-distribute obligation, means— 
 (a) except in a case falling within paragraph (b) or (c), the period of one year ending with the 31st March next before the time when notification of the contravention was given under paragraph 4; 
 (b) in the case of a person who at that time, has been carrying on that business for a period of less than a year, the period, ending with that time, during which he has been carrying it on; and 
 (c) in the case of a person who at that time has ceased to carry on that business, the period of one year ending with the time when he ceased to carry it on. 
 (7) In this paragraph ''the notified packager'' has the same meaning as in paragraph 6. 
 Suspending or restricting entitlement for contravention of must-distribute obligations 
 8 (1) OFCOM may give a direction under this paragraph to a person who is a satellite packager (''the contravening packager'') if they are satisfied— 
 (a) that he is or has been in serious and repeated contravention of a must-distribute obligation; 
 (b) that the imposition of penalties and the giving of enforcement notifications under paragraph 5 have failed to secure compliance by that person with the obligation that he has contravened; and 
 (c) that the giving of the direction is both appropriate and proportionate to the contraventions in respect of which it is imposed. 
 (2) A direction under this paragraph is— 
 (a) a direction that the entitlement of the contravening packager to act as a satellite packager is suspended (either generally or in particular respects); or 
 (b) a direction that that entitlement is restricted in the respects set out in the direction. 
 (3) A direction under this paragraph— 
 (a) must specify the activities to which it relates; and 
 (b) except so far as it otherwise provides, takes effect for an indefinite period beginning with the time at which it is notified to the person to whom it is given. 
 (4) A direction under this paragraph— 
 (a) in providing for the effect of a suspension or restriction to be postponed may provide for it to take effect only at a time determined by or in accordance with the terms of the direction; and 
 (b) in connection with the suspension or restriction contained in the direction or with the postponement of its effect, may impose such conditions on the contravening packager as appear to OFCOM to be appropriate for the purpose of protecting the packager's customers. 
 (5) Those conditions may include a condition requiring the making of payments by way of compensation for loss or damage, or for any annoyance, inconvenience or anxiety, that is suffered by the contravening packager's customers as a result of the direction. 
 (6) Where OFCOM give a direction under this paragraph, they shall, as soon as practicable after doing so, provide that person with an opportunity of— 
 (a) making representations about the effect of the direction; and 
 (b) proposing steps for remedying the situation. 
 (7) If OFCOM consider it appropriate to do so (whether in consequence of any representations or proposals made to them under sub-paragraph (6) or otherwise), they may revoke a direction under this paragraph— 
 (a) with effect from such time as they may direct; 
 (b) subject to compliance with such requirements as they may specify; and 
 (c) to such extent and in relation to such activities as they may determine. 
 (8) For the purposes of this paragraph there have, in any person's case, been repeated contraventions of must-distribute obligations if— 
 (a) more than one notification under paragraph 4 has been given to that person in respect of the same contravention or in respect of different contraventions of the same obligation; and 
 (b) the latest of those notifications was given no more than twelve months after the day of the making by OFCOM of a determination for the purposes of paragraph 5 or 6 that the contravention to which the earliest notification related did occur. 
 Enforcement of directions under paragraph 8 
 9 (1) A person is guilty of an offence if he acts as a satellite packager— 
 (a) while his entitlement to do so is suspended by a direction under paragraph 8; or 
 (b) in contravention of any restriction contained in such a direction. 
 (2) A person guilty of an offence under sub-paragraph (1) shall be liable— 
 (a) on summary conviction, to a fine not exceeding the statutory maximum; 
 (b) on conviction on indictment, to a fine. 
 (3) Paragraphs 4 to 7 apply in relation to a contravention of conditions imposed by a direction under paragraph 8 as they apply in relation to a contravention of a must-distribute obligation. 
 Civil liability for contravention of must-distribute obligations 
 10 (1) The obligation of a person to comply with— 
 (a) a must-distribute obligation applying to him, 
 (b) a requirement imposed on him by an enforcement notification under paragraph 5, and 
 (c) the conditions of a direction under paragraph 8, 
 shall be a duty owed to every person who may be affected by a contravention of the condition or requirement. 
 (2) Where a duty is owed by virtue of this paragraph to any person— 
 (a) any breach of the duty that causes that person to sustain loss or damage, and 
 (b) any act which by inducing a breach of the duty or interfering with its performance causes that person to sustain loss or damage and which is done wholly or partly for achieving that result, 
 shall be actionable at the suit or instance of that person. 
 (3) In any proceedings brought against a person by virtue of sub-paragraph (2)(a), it shall be a defence for that person to show that he took all reasonable steps and exercised all due diligence to avoid contravening the obligation requirement or condition in question. 
 Part 3 
 Information Provisions 
 Power to require information 
 11 (1) OFCOM may require a person appearing to them to be a satellite packager to provide them with all such information as they consider necessary for the purpose of ascertaining whether any person is contravening or has contravened— 
 (a) a requirement to give notification under section [notification requirements for satellite packages]; or 
 (b) a must-distribute obligation. 
 (2) OFCOM may also require a satellite packager to provide them with information for statistical purposes. 
 (3) OFCOM shall not require the provision of any information under this paragraph except— 
 (a) by a demand for the information that describes the required information and sets out OFCOM's reasons for requiring it; and 
 (b) where the making of a demand for that information is proportionate to the use to which the information is to be put in the carrying out of OFCOM's functions. 
 (4) The reasons for requiring information for statistical purposes must define the statistical purposes for which the information is required. 
 (5) A person required to provide information under this paragraph must provide it in such manner and within such reasonable period as may be specified by OFCOM. 
 Application of Part 2 of Schedule to enforcement of information requirements 
 12 (1) Subject to sub-paragraph (2), Part 2 of this Schedule applies for the enforcement of a requirement imposed under paragraph 11 as it applies for the enforcement of a must-distribute obligation. 
 (2) The amount of a penalty imposed under paragraph 6 by virtue of this paragraph must not exceed £50,000. 
 (3) The Secretary of State may by order amend this paragraph so as to substitute a different sum for the sum for the time being specified in sub-paragraph (2). 
 (4) For the purposes of paragraph 8 (as applied by this paragraph) there have, in any person's case, been repeated contraventions of requirements imposed under paragraph 11 if— 
 (a) more than one notification under paragraph 4 (as applied) has been given to that person in respect of the same contravention or in respect of contraventions of different requirements; and 
 (b) the latest of those notifications was given no more than twelve months after the day of the making by OFCOM of a determination for the purposes of paragraph 5 or 6 (as applied) that the contravention to which the earliest notification related did occur. 
 Offences 
 13 (1) A person who fails to provide information in accordance with any requirement of OFCOM under paragraph 11 is guilty of an offence and shall be liable— 
 (a) on summary conviction, to a fine not exceeding the statutory maximum; 
 (b) on conviction on indictment, to a fine. 
 (2) In proceedings against a person for an offence under sub-paragraph (1) it shall be a defence for that person to show— 
 (a) that it was not reasonably practicable for him to comply with the requirement within the period specified by OFCOM; but 
 (b) that he has taken all reasonable steps to provide the required information after the end of that period. 
 (3) A person is guilty of an offence if— 
 (a) in pursuance of any requirement under paragraph 11, he provides any information that is false in any material particular; and 
 (b) at the time he provides it, he either knows it to be false or is reckless as to whether or not it is false. 
 (4) A person guilty of an offence under sub-paragraph (3) shall be liable— 
 (a) on summary conviction, to a fine not exceeding the statutory maximum; 
 (b) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine, or to both. 
 (5) No proceedings for an offence under sub-paragraph (1) are to be brought unless— 
 (a) OFCOM have given the person a notification, in relation to the contravention in question, under paragraph 4 (as applied by paragraph 12); 
 (b) the period allowed under paragraph 4 for the provision of the information to which the contravention relates has expired without the information being provided; and 
 (c) OFCOM are satisfied that the case is not one in which it would be appropriate to impose a financial penalty under paragraph 6 (as so applied). 
 Statement of policy on information gathering 
 14 (1) It shall be the duty of OFCOM to prepare and publish a statement of their general policy with respect to— 
 (a) the exercise of their powers under paragraph 11; and 
 (b) the uses to which they are proposing to put information obtained under that paragraph. 
 (2) OFCOM may from time to time revise that statement as they think fit. 
 (3) Where OFCOM make or revise their statement of policy under this paragraph, they shall publish that statement or, as the case may be, the revised statement in such manner as they consider appropriate for bringing it to the attention of the persons who, in their opinion, are likely to be affected by it. 
 (4) It shall be the duty of OFCOM, in exercising the powers conferred on them by this Part of this Schedule to have regard to the statement for the time being in force under this paragraph. 
 Obligation of OFCOM to provide information 
 15 (1) On application made for the purpose by any person, OFCOM must comply with any request contained in that application— 
 (a) to notify the applicant whether or not any notification is required to be submitted by him under section [notification requirements for satellite packagers]; and 
 (b) to notify the applicant whether any notification submitted by him for the purposes of that section satisfies the requirements of that section. 
 (2) An application for the purposes of this paragraph must be made in such manner and form as OFCOM may require. 
 (3) OFCOM shall not be required to comply with a request contained in an application under this section if (without having been asked to do so) they have already given that person the notification or information for which he is asking. 
 (4) Any notification or information which under sub-paragraph (1) must be given or provided by OFCOM must be given or provided before the end of the period of one week beginning with the day on which the application for the notification or information was made to OFCOM. 
 Part 4 
 Interpretation of Schedule 
 16 (1) In this Schedule ''must-distribute obligation'', in relation to any person means an obligation imposed by a condition applied to him under section [conditions applying to satellite packagers]. 
 (2) For the purposes of this Schedule, where there is a contravention of an obligation that requires a person to do anything within a particular period or before a particular time that contravention shall be taken to continue after the end of that time, until that thing is done. 
 (3) References in this Schedule to remedying the consequences of a contravention include references to paying an amount to any person by way of compensation for loss or damage suffered by that person, or in respect of any annoyance, inconvenience or anxiety to which he has been put. 
 (4) In determining for the purposes of any provision of this Schedule whether a contravention is a repeated contravention for any purposes, a notification of a contravention under any such provision shall be disregarded if it has been withdrawn before the imposition of a penalty in respect of the matters notified.'.

Nick Harvey: I do not know whether this was the point at which the hon. Member for Milton Keynes, North-East thought that the blood-letting would begin, but, suffice to say, I do not see the debate in quite those terms. The Government have a long-standing commitment to ensuring the universal availability of public service broadcasting, which was underlined in the policy narrative to the draft Bill. That referred back to the Government's White Paper as having offered a
''strong commitment . . . to ensuring that public service broadcasters are available on all the main platforms, both before and after digital switchover. There was also a commitment that they should be available to all those who receive them at present.''
 The policy narrative went on to propose a balance of obligations. There should be a must-offer obligation on public service broadcasters to provide their services to all platforms balanced by a dual obligation on the main packagers and retailers of satellite channels, both to provide those channels at no extra cost to all their subscribers and to make cards available to those satellite viewers who were not subscribers to any particular satellite package. 
 The balance of obligations was spelled out in greater detail in the draft clauses published by the Government in July last year. They were described at the time as containing the 
''principal clauses to give effect to the policies set out in the Policy statement, including revised clauses relating to the ''must-carry'' provisions contained in the draft Bill''.
 In case any members of the Committee thought that my hon. Friend the Member for Sheffield, Hallam and I had spent endless hours dreaming up what the clauses for a must-carry obligation might look like, let me point out to anyone who has not spotted it that the amendments and new clauses now being discussed are the self-same ones that the Government tabled in July, brought back for our further consideration. That is not because we thought that they were perfect. From my perspective, it was perfectly clear that the July clauses had some critical weaknesses. I think that the Joint Committee, which examined them when the ink was still wet, also took that view. 
 First, those clauses did not propose any action until after digital switchover, whereas I believe strongly that sorting the matter out beforehand should be a precondition for digital switchover. The Joint Committee's report said: 
''We see no logic in the Government providing itself and OFCOM with a valuable failsafe and then circumscribing the time at which it can be used. We recommend that the final Bill seeks to give effect to the ''must-carry''/''must-offer''/''must distribute'' arrangements on all platforms and the most effective solution to regional distribution, as determined by OFCOM, at the earliest possible opportunity.''
 Secondly, the July clauses did not address the vexed question of pricing for PSB access through digital satellite set-top boxes, although the Government said that they were considering what to do about that. Without that, access to PSB services for the majority of digital viewers will be dependent on lengthy commercial negotiations between the public service broadcasters, Sky and ultimately, if they cannot arrive at agreement, Ofcom. We saw that when past disputes between ITV and Sky did not resolve themselves and the two parties went to Oftel, it took an inordinate length of time to arrive at a conclusion. 
 That is no way in which to achieve universal access to such crucial services. That is why I shall be looking at amendment No. 527 under the next group. The critical question that I would like answered now is why the Government believed in July that more than 34 pages of clauses were needed to guarantee universal accessibility to public service broadcasting but no longer feel that that is the case. Have they decided that they no longer care about ensuring universal availability of PSB? I presume not. Do they now believe that universal access is guaranteed anyway by the European directives implemented in secondary legislation? If so, why did they not think that in July? Given that the Bill proposes must-carry rules to guarantee universal availability on cable and specifically allocates spectrum to terrestrial broadcasters, why does that same Bill leave such things to be resolved for the dominant digital platform—satellite—simply through the vagaries of a commercial negotiation that may or may not produce the desired result? 
 That does not make much sense to me, and I do not think that it will make much sense to others. It would not make much sense to satellite viewers if at any time, even only briefly, public service channels became unavailable to them. I readily acknowledge that the matter is complicated, and I do not mean to point fingers at the Government and accuse them of mischief. I have listened to quite persuasive representations from Sky, asserting that existing EU directives provide a must-carry regime in effect. However, if that is the case, why did the Government not take that view in the first place? 
 Should we not stop to think whether it is a satisfactory solution to such a tricky problem to allow lengthy negotiations between commercial parties that will ultimately be refereed—on past form, very slowly—by Ofcom? It might be better to be more proactive and give Ofcom a responsibility by some means—even if that is not the amendments currently before us—to establish a regime for dealing with such issues in a much speedier, more effective and fairer manner. 
 At the very least, something has changed the Government's thinking between July and now. They have not said much on public record concerning what has changed their minds. I look forward to hearing the Minister explain what it was.

John Whittingdale: I start on a note of agreement with the hon. Member for North Devon, concerning the importance of ensuring that the public service broadcasters are available on digital platforms. That is clearly right. The argument is whether the provision is necessary to achieve that.
 The hon. Gentleman was honest in moving his amendment. He admitted that he was not the author of the amendments and new clauses. He pointed out that they were proposed by the Government in the original draft legislation and questioned why the Government decided to withdraw them. I suspect that they did so because they listened to the arguments, acknowledged that those arguments were correct and realised that the provisions were unnecessary. The hon. Gentleman asked why the Government thought it necessary to put them forward in the first place, if that were the case. That is a perfectly reasonable question and I am interested to hear the Minister's response. I shall not waste too much time attacking the Government for what they did previously, when in my view, they have finally reached the correct conclusion. 
 Terrestrial broadcasters have made several arguments as to why the provisions for must carry are necessary, the first of which is that they are necessary to balance the Government's provisions for must offer. I do not think that that follows. There is a clear need for a must-offer provision, which is demonstrated by the fact that for a long time one of the main public service broadcasters did not offer. As a subscriber to digital satellite, I can tell the hon. Gentleman that I found it extremely annoying that I was unable to obtain ITV on satellite for a long time. 
 ITV have now acknowledged that as a mistake. I was pleased that the head of the ITV network told me that, in retrospect, it had been a mistake. It was clearly a device to try and drive viewers to subscribe to ONdigital where they could find digital ITV. By withholding the product from satellite, ITV felt that it might give a commercial advantage to ITV Digital. In fact, the move proved unsuccessful. It is worth pointing out that it did so at considerable cost to itself. ITV has now admitted that when it reversed its decision and decided to make ITV available through satellite, it immediately benefited from a dramatic increase in the digital dividend, which meant that it made a net gain.

Parmjit Dhanda: I am interested to know whether the hon. Gentleman thinks it is right or fair that it cost ITV £17 million to be carried on the Sky platform, when it only cost about £100,000 for them to be carried?

John Whittingdale: I will come on to the question of whether they should play the marginal costs, but it is worth pointing out that Granada announced in its year-end results on 30 September:
''The benefit from the digital dividend at £49 million was £39 million more than the previous year due largely to the carriage of ITV1 on satellite.''
 Although it may have had to pay something to go on to the satellite, the amount that it got back in the digital dividend was considerably greater and as a result it saved money by going on to the satellite. It has not made as much of that as it might have done in advancing its arguments. Its original behaviour in staying off the satellite was damaging in that it may have deterred people from going over to digital. If we are to achieve digital switchover, it is clearly important that people see advantages in changing. The fact that people could not get ITV perhaps made the digital satellite less attractive than it would have been.

Richard Allan: Does the hon. Gentleman agree that the situation in relation to the desirability of the public being able to access all the public service broadcasters is likely to become significantly worse as people remove their analogue infrastructures? The situation was not fundamentally serious when Sky did not carry ITV 1 because people could still access ITV 1 through their analogue infrastructure. However, over time we can expect people to have only a single digital infrastructure. They will take away their old analogue TV aerials and neither maintain them, nor convert them for digital terrestrial. That makes the problem far more serious. We must ensure that everybody carries all the PSB channels.

John Whittingdale: I entirely accept that. Although once one had experienced digital satellite and the superior quality of the signal, the fact that one had to switch back to analogue to watch ITV simply brought home the poor quality of the technology that one was leaving behind. Obviously, if we do reach a point at which analogue is no longer available, must offer potentially becomes far more important. I do not think that there is any disagreement on must offer.
 It is ironic that it was the commercial companies that lobbied us in 1995. Veterans of the Broadcasting Act 1996 will remember the debates on conditional access, which seemed to take up a huge amount of our time. As a result of the lobbying, we achieved the passage of the European advanced television standards directive, which includes a legislative requirement that broadcasters should be given access to the digital satellite platform on ''fair, reasonable and non-discriminatory'' terms. That is the crux of the matter. There is no question but that public service broadcasters can gain access to the digital satellite platform. It is an open platform, unlike, for instance, cable. 
 The question revolves around the amount that broadcasters should have to pay. That brings me to the point that was made by the hon. Member for Sheffield, Hallam. Some people have suggested that public service broadcasters should enjoy access to the platform and pay only the marginal cost. I do not see why that should be so. Although public service broadcasters are doing a public service, that does not mean that they should not have to pay the full cost of any other service that they purchase. They do not get a discount on their electricity bills or pay only a marginal cost; they have to contribute to the overall cost of the infrastructure. 
 It is worth saying that we all take digital satellite for granted, but when it was launched an awful lot of people thought that it was going to be a miserable failure. It involved the investment of billions of pounds and a number of people thought that those making that investment were going to come seriously unstuck. It took a leap of faith to make the investment. At the time, there was also competition from BSB. Several people said that BSB was by far the superior technology and that Sky would not survive against the BSB squarial. Well, so much for those who thought that they knew better. 
 Given the investment that was made at the time and the risk involved, it is only reasonable that those people should be able to get a return on their investment. To say that the public service broadcasters should not have to pay the same commercial terms as others and should not have to make a contribution to the overall cost of establishing the infrastructure is entirely unreasonable. That is not only my view but that of Oftel, which has clearly stated that 
''public service broadcasters should pay a commercially negotiated rate for conditional access services . . . This is the basis on which they would expect to pay for any other service which they need to purchase, including other regulated services.''
 The terms by which public service broadcasters achieve a contract for carriage on a satellite are rightly subject to scrutiny by Oftel. We are talking about a monopoly, which is why we were clear in 1996 that conditional access terms should be regulated—indeed, they have been regulated. Oftel has clearly stated that 
''conditional access providers will not be able to charge above levels that are fair, reasonable or non-discriminatory. All purchasers of conditional access, including public service broadcasters, are able to ask Oftel to enforce this requirement if they regard it as being breached.''
 That has always been the case, and it will remain the case under the Bill. 
 A number of people are pressing for the provision to be put back into the Bill because they do not like the result of Oftel's decision. Oftel has recently examined a complaint about the terms being charged and on 22 October 2002 concluded that 
''Oftel found no evidence to support ITV's complaint that SSSL's charges for access to their satellite network were unreasonable, unfair or discriminatory. Oftel has therefore rejected ITV's complaint.''
 Sadly, the hon. Member for Rhondda (Mr. Bryant) is not with us this afternoon, but he told me that Oftel had got it wrong. The purpose of establishing a regulator is to establish a body of experts in the examination of competition law and potential monopoly abuse who are independent and able to arbitrate on complaints of that kind. We cannot turn round and say that they have got it wrong when they reach a decision. 
 I say to the hon. Member for North Devon that the Government's finding it necessary to take the clauses out of the final version of the Bill is an acknowledgement that a successful mechanism is already in place, which will ensure that public service broadcasters are able to access the satellite and that they can do so on fair terms. I therefore support the Government in their decision not to proceed with the must-carry clauses.

Richard Allan: I rise to explore a couple of issues under the clause stand part heading. They concern subsections (8) and (9), which are about setting the terms for any agreement. As the debate has progressed we have heard different views, but the contentious point from the public interest angle is whether the public can get the public service broadcast channels that they want across all platforms or whether things are held up in dispute. The other side of that issue is whether the terms will ensure that the money, which would otherwise be going into programme making for public service broadcasters, is not being paid over the odds for carrying those channels. The public want a balance between those two issues.
 Subsections (8) and (9) set out the procedures by which agreements will be made. Subsection (8) indicates that the Secretary of State rather than Ofcom has the primary responsibility, and subsection (9) states that the Secretary of State can effectively delegate those powers to Ofcom. It would be helpful for the Minister to indicate whether the intention is to continue with the current arrangements, in which case subsection (9) means that the Secretary of State will not be involved in negotiating those terms, as that will be delegated to Ofcom, or whether there is an intention for the orders to be more specific on the Secretary of State's role in trying to reach agreement in any potential future dispute between the two. It is interesting that the Secretary of State has the primary responsibility. 
 Can the Minister assure us that the intention is to be as open as possible on the information about reaching a settlement? Part of the problem is that we are given different figures from all sides. The broadcasters, who clearly have their own beef, are 
 coming to us and saying, '' We are being charged unreasonably. The platforms we are expected to carry have their own arguments.'' 
 The arguments that the hon. Member for Maldon and East Chelmsford made about the serious capital investment by satellite broadcasters could equally be advanced in respect of cable companies. The financial difficulties that many of them face show that their investments were risky. They are not arguing for the ability to charge more, but there are interesting parallel arguments about investments in infrastructure and the need to make a return.

John Whittingdale: Investment in cable is a risky venture, and there is a need to achieve a return. However, the positions of cable and satellite companies are not equivalent. A satellite is an open platform from which anyone, by agreement, can be carried. Cable companies offer packages—there is no equivalent open access. Indeed, the BBC has acknowledged that there is no analogy between their negotiations with cable companies and with satellite companies.

Richard Allan: I accept the distinction. I simply wanted to make a point about investment difficulties. There is a public interest in the cable infrastructure not going down, in commercial terms, and there are parallel arguments about the way in which investment is made, but I fully accept that the commercial models used for television carriage are actually very different because of the two different platforms.
 I conclude with a point about openness, which is important. The hon. Member for Maldon and East Chelmsford correctly used the word ''fair'' for what we are trying to achieve. I referred to finding a level playing field, but that is not possible. It would be like trying to find a level playing field in Sheffield—they are all on the sides of hills. If one kicks the ball too hard, it ends up in Manchester. We will not find a level playing field—it is not possible in the context—but one that is fair. 
 The public interest is not to pay over the odds for public service broadcast channels but at the same time to pay fairly to support the infrastructure that delivers the service to them—the hon. Gentleman made a reasonable point. So that everyone can evaluate whether the charge is fair, and with the public interest in mind, far more information must be made available. 
 It is very clear from the clause that the Secretary of State is primarily responsible if we do not get Channel 3 from one of our broadcasters in the future. I hope that the Secretary of State will set the conditions and the process in a way that makes available as much information as possible from a largely neutral source, presumably the Department for Culture, Media and Sport and/or Ofcom, so that we are able to evaluate whether deals have been settled with fair terms to all sides.

Parmjit Dhanda: Having had an Adjournment debate on the topic with my hon. Friend the Minister some time ago, it would be rude not to say something about
 it. I read the brief that was written collectively by the BBC, ITV, Channel 4 and Channel Five. It is not often that they all see eye to eye on an issue.

Kim Howells: I wonder why. [Laughter.]

Parmjit Dhanda: Let me quote one powerful paragraph from the brief. It says that if the situation continues unchanged,
''hundreds of millions of pounds will be diverted from public service programming to BSkyB in the next decade, helping boost BSkyB's revenues, underwriting its set top box subsidies, and entrenching its dominance of the digital market.''

Brian White: One of the issues that have been mentioned is the cost. However, given that ITV, for example, bears only one tenth of the cost that Sky bears for the conditional access charge, is not the burden of administration of the conditional access network, which brings benefits to all broadcasters, actually falling on BSkyB rather than the public service broadcasters?

Parmjit Dhanda: One can argue that it is. I shall deal with that point in a moment. I mentioned earlier the $17 million that was paid, but we must ask whether £17 million is the right amount to pay for something that may cost closer to £100,000. We can discuss the actual cost later. Let me return to the brief from the broadcasters:
''A huge subsidy from public service broadcasters (transferring investment from programming) to subsidise Sky's set-top box giveaway, a marketing decision taken to drive its own Pay TV subscriptions, is quite another. That cannot be what Parliament had in mind.''
 We may take what the BCC, ITV, Channel 4 and Channel Five say with a pinch of salt or we can actually listen to it. However, £17 million does seem a lot of money to have ITV put on the Sky platform. 
 I had my Adjournment debate after many of my constituents had written to me because they had shelled out for premiership football and also wanted to be able to watch champions league football but, because of the dispute between those that must offer and those that must carry, that was not possible without also purchasing the other platform. We must look carefully at those issues. 
 I seek clarification of the EU directive. If it is the answer to all our concerns, that is terrific. It is what we want to hear. However, I have my own concerns in that the directive may result in bureaucratic problems and slow down the process when we should be looking for another way of resolving the problem, perhaps through Ofcom rather than the commercial negotiation that we are discussing.

Simon Thomas: This has been an interesting debate and the briefings have been hard at work. They come to the surface like a lump of coal which hon. Members have picked up and shared with the Committee. The issue is difficult for hon. Members to pick through because strong commercial interests are at work, as well as public interest. I should like the Minister to explain—the hon. Member for North Devon referred to this earlier—the thinking behind tabling and then withdrawing the proposals. If we know what thoughts
 went through the Government's mind, we might be better placed to build a framework for the future. There must be some movement on this—perhaps a middle way—that would allow BSkyB to recoup some of its investment over many years in building up a digital satellite audience and, at the same time, acknowledge the position of terrestrial broadcasters who must offer their programmes. That is very different from the position of al-Jazeera or any other television station coming along and asking to pay to put their programme on a satellite channel.

Brian White: Was that not the crux of the Oftel investigation? It came down squarely with an answer in a large amount of paperwork. The answer was that the current regime delivers what the hon. Gentleman is asking for.

Simon Thomas: I accept that that was the purpose of the Oftel examination. My concern is that in setting what seem to be quite high costs, particularly in ITV's case, for access when a channel must be offered under the Bill—that was not the case before—could lead to a breakdown of service or difficulty in negotiations between broadcasters and digital providers such as BSkyB. Many years ago the Government's intention was to have two satellite broadcasters to provide competition, but that did not work. There is a monopoly in satellite broadcasting and in public service broadcasting. We must marry the two together without introducing an excessive penalty.
 My final question is more specific. What is the position of customers who do not subscribe to any Sky services but simply want to invest—as I have done in my office—in the infrastructure to receive satellite digital broadcasting? My understanding is that each and every time a customer does that, a payment must be made by the public service broadcaster to Sky according to a set scale. That could increase enormously because the last rump of people who are reluctant to cross to digital broadcasting are those who do not want to subscribe. They will expect to receive free on digital the analogue or terrestrial services they now receive. They will take the extra services as a little bonus, but they will certainly not want to pay for them. If there is an expansion in the number of customers, there will be an increase in the payments that public service broadcasters will have to make to the digital satellite broadcaster BSkyB. That might increase the burden considerably and, bearing in mind the Oftel investigation and decision, might have a much more injurious effect on the sums available for public service broadcasting in the very long term. I hope that the Minister will pick up on that, and explain why we are using the current framework of the Bill and why the Government have gone back on their initial movements to ensure a smoother arrangement on must carry and must offer.

Kim Howells: The amendments would reintroduce draft clauses that we withdrew after extensive consultation with various stakeholders. Following the publication of the draft clauses, we had many representations from interested parties and many discussions with them—rightly so, because this is a controversial subject, and our decisions might have strong impact on businesses. We carefully considered
 all points of view before we made our decisions, and we believe that we ended up with a good balance.
 The bottom line is that we must ensure that public service channels are available on all digital platforms after analogue is switched off. A different approach is needed according to the particular platform. The EC communications directives require that access to conditional access systems be given on fair, reasonable and non-discriminatory terms. Quite rightly, Ofcom, and not the Government, will determine what is fair, reasonable and non-discriminatory, and what that means in relation to public service broadcasters. We are creating Ofcom—and are spending enough time doing it—so we should not then say, ''No, we don't trust it.'' I trust Ofcom and I trust Oftel, and the deliberations that it published in October. 
 It is absolutely appropriate that the decision on what is fair, reasonable and non-discriminatory—FRND, as we in the Department call it—in a commercial transaction should be taken by an independent regulator in an open and transparent manner, and should be based on economic analysis. The hon. Member for Sheffield, Hallam hinted that perhaps the regulation was not as transparent as it should be on this matter. We debated the subject under clause 3(3)(b), and I reiterate that Ofcom must have regard to the principles of good regulatory practice, including transparency, set out in clause 3. We will expect Ofcom to stick to those principles, and I think that it will. 
 As the hon. Member for Maldon and East Chelmsford told us, on 22 October Oftel issued a revised set of conditional access guidelines, which explained how Oftel expects conditional access prices to be calculated by digital platform providers, particularly Sky Subscribers Services Ltd., a Sky subsidiary providing conditional access systems. Oftel makes it clear that it was inappropriate for BSkyB to require customers to subscribe to one of its packages to receive the free-to-air channels when all broadcasters were required to contribute to the subsidy of boxes through conditional access charges. That is a helpful statement, and following discussions with Oftel, BSkyB anticipated the regulator's decision, and removed the contractual requirement for consumers who receive a free set-top box to subscribe to its digital television services. That re-creates a free-to-view satellite option for the consumer. I hope that the hon. Member for Ceredigion heard that; I know that it is late in the afternoon, and I could miss that statement, too. 
 Given responses to the consultation, the new guidelines, and the decision about the free set-top box, it was decided that our policy might be better implemented through a different technical way. There are strong reasons for that decision. 
 The decision to turn off the analogue signals but to ensure universal access to PSB channels has been taken by the Government and its cost should not be borne by private companies. Commercial PSBs already get the digital dividend, as the hon. Member for Maldon and East Chelmsford reminded us. That does much more than simply compensate for the extra costs of 
 conditional access. The proof of that is that broadcasters have taken the commercial decision to be on satellite, have enjoyed the benefits, and, even with the current charges for conditional access, have found it profitable. 
 New provisions have been introduced to ensure that, when the broadcasters are under a legal obligation—that is, when the must-offer and must-provide provisions are commenced by order—Ofcom will review the financial conditions of their licences and, if appropriate, decrease them. The BBC will not benefit from such a review, but it would be part of their licence fee settlement. In addition, Oftel recognises that it will be entitled to different treatment and may get a better deal from Sky. That may also apply to Channel 4. For all those reasons, we do not wish to reintroduce these provisions to the Bill and I hope that hon. Members will not press their amendments. 
 I will explain what we intend to do with clause 60 and the must-offer provisions. As I have said, we are strongly committed to ensuring that public service channels are available on all the main platforms so that citizens may watch them wherever they live in the United Kingdom and whatever platform they use to receive their television signals. 
 All the must-carry, must-offer and must-provide provisions will have huge implications for the industry. I am sure that everyone on the Committee understands that. They will also have huge implications for viewers. We have had strong and conflicting representations from all parties. We tried to find the best compromise to achieve our aim of ensuring universal and free access to PSBs while ensuring that all interested parties were fairly treated. We had to comply with European legislation and this clause implements condition 6 of part A to the annexe to the authorisation directive and article 31 of the universal service directive. 
 We want public service channels to be available on all the main platforms before and after switchover. I will explain the mechanism that we want to set up to meet that objective. In simple terms, we impose on PSBs the obligation to offer their services to all the main platform operators; and, as far as practicable, we impose on platform operators the obligation to carry those services. However, as hon. Members have already hinted, different arrangements are needed for different platforms. 
 On cable, we reproduce the present system—with must-offer and must-carry provisions—and, in respect of must-carry provisions, we do so in accordance with the new EC rules for networks and services. Cable operators are no longer subject to a licence but they may operate within the general authorisation framework. We give Ofcom the power to ensure that general conditions may be imposed within that framework to secure the availability of public service channels on networks that are used by a significant number of people as their principal means of receiving television. 
 The list of must-carry and must-offer services will be the channels funded by the BBC licence fee, 
 Channel 3, Channel 4, S4C, Channel Five and the public teletext service—in their digital form. There are also powers for the Secretary of State to add new channels and to make provision for reasonable compensation and other terms. Those arrangements and the list of must-carry and must-offer services will be reviewed regularly, as required in respect of must-carry services by EC legislation—having regard to such things as the public benefit secured by the channel, the availability of technical capacity, and proportionality. We will ensure that we do not impose any unreasonable burden on cable operators. We are aware of their concern that a long list of must-carry channels may decrease the attractiveness of their platform. We will ensure that that is not the case, while securing universal access to those channels that really benefit the public. A thorough economic analysis will be conducted to ensure that the result is fair to broadcasters, network providers and in benefits to the citizen. That is what the clause provides for. We will not expect Ofcom to impose any must-carry conditions, so long as broadcasters and cable operators reach a voluntary agreement. 
 To explain the full mechanism, I will sum up what happens on terrestrial and on satellite. On terrestrial, public service broadcasters have guaranteed capacity and they must use that to provide a digital simulcast service: if they fail to do so, they risk losing their licences. We have various clauses to ensure that that capacity is made available by Ofcom and by the multiplex providers. 
 On satellite, things are not so easy. We must draw a distinction between the satellite operators, such as Astra and Eutelsat, who sell or let transponder spaces on their satellites, the providers of the satellite network who provide the transmission system and so forth that are necessary for the transmission of signals to and from the satellite, the companies that provide satellite services to consumers, such as BSkyB, and the companies that provide access to conditional access systems. 
 We cannot impose any obligations on the satellite operators, as they are not under our jurisdiction. However, I wish to stress that clause 60 applies to any electronic communications network by cable, xDSL or satellite that is provided in the UK. We had thought of imposing requirements on satellite packagers, but we considered that this new regulatory measure would be a disproportionate burden for those operators and that it would not deliver an effective solution for public service broadcasters. Therefore, we will rely on the EC rules, which require conditional access system providers to offer their services on fair, reasonable and non-discriminatory terms. Ofcom will implement the EC provisions—as Oftel currently does. 
 We are adding provisions to require public service broadcasters to offer their channels on satellite—the must-offer conditions—and to provide solus cards to those viewers who will no longer be able to receive terrestrial signals after switchover—that is part of the must-provide conditions. The hon. Member for Ceredigion did not mention that point, but he got 
 close to doing so. We will look in detail at the provisions for satellite when we reach the relevant clauses, but I thought that it would be useful to describe the full picture of the provisions that ensure the distribution of public service channels on all the main platforms. 
 Those arrangements for cable and satellite will be brought into effect only if and when that is necessary. We might be in a situation in which contractual arrangements make the implementation of those arrangements superfluous, but we might not, in which case a commencement order would bring them into effect. We do not expect that to happen now, but we might need to commence those provisions in the run-up to full switchover in order to allow it to happen. Before we switch off the analogue signals, we would want to ensure that the small number of people who cannot get digital terrestrial television can receive their television services by another means.

John Greenway: Given that we will not reach clause 266 before five o'clock, in light of what the Minister is saying, will he look carefully at amendment No. 451? It is important to ensure that the cost of providing the solus cards does not arise unless and until we are actually at the point of digital switchover. He does not have to respond to that point now.

Kim Howells: I assure the hon. Gentleman that I will look into that.
 Question put and agreed to. 
 Clause 60 ordered to stand part of the Bill.

Clause 71 - Conditional access systems and access to

Nick Harvey: I beg to move amendment No. 527, in
clause 71, page 70, line 11, at end insert— 
 '(2A) It shall be the duty of OFCOM, when setting access-related conditions under section 69(5), and ensuring that the conditions are set in accordance with subsection (2)(b) (and in particular the first indent to sub-paragraph (b) of Part 1 to Annex 1 to the Access Directive), that the factors listed in subsection (2B) are taken into account. 
 (2B) The factors referred to in subsection (2A) are— 
 (a) achievement of any of the three objectives specified in section 264 or 265 or of any corresponding objectives in relation to the BBC, or the imposition of any obligation pursuant to section 264 or 265, or any corresponding obligation imposed on the BBC, whether (in the case of the BBC) corresponding objectives or corresponding obligations arise under such an agreement as is referred to in section 193 or otherwise; 
 (b) the extent, if any, to which a person to whom such a conditional access system is to be provided requires the use of such a system— 
 (i) to achieve an objective or to secure the discharge of an obligation of the kind referred to in paragraph (a); or 
 (ii) to achieve objectives or secure the discharge of an obligation imposed on it pursuant to its licence or, in the case of the BBC, pursuant to objectives or obligations laid down in its Charter or pursuant to the agreement referred to in section 193; and 
 (c) the extent, if any, to which the use of such a system by the person to whom such a system is to be supplied confers a benefit on the provider of such a system or on any other person having a commercial interest in such provider.'. 
As with the amendments to the previous clause, this is not an entirely original idea. In the policy narrative to the draft Bill, the Government floated the idea of requiring Ofcom to consider the special position of public service broadcasters, when regulating the price of access to satellite conditional access systems. 
 Given his response to our arguments about the previous clause, I am disappointed that the Minister did not cast much more light on the consultation processes of last July. He seems to have great faith in the commercial negotiations. Oftel's interpretation of European Union rules for regulating access to conditional access services requires commercial negotiations that are focused on fair and effective competition. That will leave Sky, as the satellite provider, with great freedom and in a strong position, whereas the public service broadcasters will have less freedom. We are, in effect, putting a pistol to their heads and not putting an equivalent pistol to the head of Sky as the platform provider. 
 Sky's arguments were rehearsed by the hon. Member for Maldon and East Chelmsford. It has gambled and invested hugely. I would not argue that public service broadcasters should go up to the satellite platform free, nor that they should do so even at marginal cost. It is fair that public service broadcasters pay for everything else, such as electricity. Nevertheless, just throwing such matters entirely into the negotiating process, as the Government intend to do, still leaves Sky in a very strong position.

Kim Howells: The hon. Gentleman is aware that we are running out of time, but I wish to refer to a matter that is central to his argument. Oftel's guidelines for conditional access that were published on 22 October advise that the special nature of public service broadcasters should be taken into account, when agreeing conditional access prices. I hope that I have reassured him.

Nick Harvey: I am grateful to the Minister. However, Sky has so designed its set-top boxes, its commercial packages and propositions that it has, in effect, required the public service broadcasters to contribute towards the costs that they have incurred in giving out their set-top boxes at a subsidised price. It is reasonable for Sky to make commercial decisions about how it wants to promote its product, as it sees fit, but it should do that entirely at its own commercial judgment, not on the basis that it can go back later and recover some of it from those whose services it puts up on to the platform.
 Public service broadcasters argue that, as things stand, they are diverting their funds towards covering Sky's commercial costs. As for the renegotiation of licence terms or the digital dividend, it can be argued that taxpayers' money is paying for that and is turning up on Sky's bottom line. I want a negotiation process set up under the Bill that is fair and happens up front. I do not agree with either the Government Front Bench or the Opposition Front Bench that the measure that we are discussing has worked hitherto, not because Oftel's conclusions were wrong, but the matter is far too drawn out and how the negotiations should be conducted, and the point at which Ofcom steps in, need to be set out more explicitly in the Bill.

Kim Howells: The only point that I need to make about the amendment is that the provision in the access directive for conditional access obligations is specific. Ofcom will have no discretion over what conditions to impose, at least until an analysis of the relevant market has been carried out. The only factors that Ofcom can consider properly when setting such conditions are the provisions of part I of annexe I to the access directive. Subsection (2) of the clause places them under a duty to have regard to such matters. Once an analysis of the market has been carried out, Ofcom will have some discretion to vary the conditions imposed on providers who did not have significant market power. That would be subject to a test that showed that neither the access of end users to must-carry services, nor the prospects for effective competition, would be adversely affected by any variation. Ofcom would have no discretion regarding the conditions that should be imposed on persons who are shown to have significant market power, which will remain those that were set out in part I of annex I of the access directive. I know that my response has been brief.
 It being Five o'clock, The Chairman proceeded, pursuant to Sessional Order C relating to Programming [29 October 2002] and the Order of the Committee [10 December 2002], to put forthwith the Question already proposed from the Chair. 
 Amendment negatived. 
 The Chairman then proceeded to put forthwith the Questions necessary to dispose of the business to be concluded at that time. 
 Clauses 71 and 72 ordered to stand part of the Bill. 
 Clauses 264 to 268 ordered to stand part of the Bill.

Clause 269 - Programming quotas for independent productions

Amendments made: No. 529, in 
clause 269, page 238, line 10, leave out 'subsection (1)' and insert 'this section'.
 No. 530, in 
clause 269, page 238, line 11, leave out 'the' and insert 'a'.
 No. 531, in 
clause 269, page 238, line 14, leave out 'that subsection' and insert 'this section'.
 No. 532, in 
clause 269, page 238, line 15, leave out 'the' and insert 'a'.
 No. 533, in 
clause 269, page 238, line 18, leave out 'that subsection' and insert 'this section'.
 No. 534, in 
clause 269, page 238, line 19, leave out 'the' and insert 'a'.
 No. 535, in 
clause 269, page 238, line 24, at end insert— 
 '(3A) The Secretary of State may also by order provide for the regulatory regime for every licensed public service channel to include conditions falling within subsection (3B), either instead of or as well as those falling within subsection (1). 
 (3B) The conditions falling within this subsection are those that OFCOM consider appropriate for securing that, in each year, not less than the percentage specified in the order of the programming budget for that year for that channel is applied in the acquisition of independent productions. 
 (3C) The power to make an order under subsection (3A) includes power to provide that conditions that have previously ceased under such an order to be included in the regulatory regime for every licensed public service channel are again so included, in addition to or instead of the conditions already so included (apart from the exercise of that power) by virtue of this section. 
 (3D) The Secretary of State is not to make an order for the regulatory regime of every licensed public service channel to include or exclude conditions falling within subsection (1) or conditions falling within subsection (3B) unless— 
 (a) OFCOM have made a recommendation to him for those conditions to be included or excluded; and 
 (b) the order gives effect to that recommendation. 
 (3E) The regulatory regime for every licensed public service channel also includes a condition requiring the provider of the channel to comply with directions given to him by OFCOM for the purpose of— 
 (a) carrying forward to one or more subsequent years determined in accordance with the direction any shortfall for any year in his compliance with the requirements of conditions imposed by virtue of subsection (1) or (3A); and 
 (b) thereby increasing the percentage applicable for the purposes of those conditions to the subsequent year or years. 
 (3F) For the purposes of conditions imposed by virtue of this section— 
 (a) the amount of the programming budget for a licensed public service channel for a year, and 
 (b) the means of determining the amount of that budget that is applied for any purpose, 
 are to be computed in accordance with such provision as may be set out in an order made by the Secretary of State, or as may be determined by OFCOM in accordance with such an order. 
 (3G) The powers of the Secretary of State to make orders under this section do not include— 
 (a) power to specify different percentages for the purposes of subsection (1), or of a condition falling within subsection (3B), for different regional Channel 3 services or for different national Channel 3 services; or 
 (b) power to make different provision for different licensed public service channels as to whether conditions falling within subsection (1) or conditions falling within subsection (3B), or both, are included in the regulatory regimes for those services.'.
 No. 536, in 
clause 269, page 238, line 30, leave out ' ''programme'' does not include an advertisement' and insert— 
 ' ''acquisition'', in relation to a programme, includes commissioning and the acquisition of a right to include it in a service or to have it broadcast; 
 ''programme'' does not include an advertisement; and 
 ''programming budget'' means the budget for the production and acquisition of qualifying programmes.'.—[Dr. Howells.] 
Clause 269, as amended, ordered to stand part of the Bill.

Clause 270 - Programming quotas for original productions

Amendment made: No. 537, in 
clause 270, page 239, line 24, at end insert— 
 '( ) The power to specify descriptions of programmes by order under subsection (6) includes power to confer such discretions on OFCOM as the Secretary of State thinks fit.'.—[Dr. Howells.]
 Clause 270, as amended, ordered to stand part of the Bill. 
 Clauses 271 to 275 ordered to stand part of the Bill. 
 Further consideration adjourned—[Mr. Jim Murphy.] 
 Adjourned accordingly at two minutes past Five o'clock till Thursday 23 January at five minutes to Nine o'clock.